If you’re in the process of buying a home, you know that getting a mortgage is a big part of the process. But what happens if you’re already in the middle of the mortgage approval process and you’re not happy with your lender? Luckily, you have options. One of the best options is to switch mortgage lenders.
Reasons to Switch Mortgage Lenders
There are several reasons why you might want to switch mortgage lenders:
Better Interest Rates
One of the biggest reasons to switch mortgage lenders is to get a better interest rate. Even a small difference in interest rates can add up to thousands of dollars over the life of your mortgage.
Better Customer Service
If you’re not happy with the customer service you’re receiving from your current lender, it may be time to switch. You want a lender that is responsive to your needs and can answer your questions in a timely manner.
More Loan Options
If you’re looking for a specific type of loan, your current lender may not offer it. Switching lenders can give you access to more loan options and help you find the loan that’s right for you.
When to Switch Mortgage Lenders
So, when is the best time to switch mortgage lenders? Ideally, you should do it 30 days before closing. This gives you enough time to find a new lender and get approved for a new mortgage.
But why 30 days? Well, there are a few reasons:
Appraisal
Once you’re in the mortgage approval process, your lender will order an appraisal of the property. This can take several weeks to complete. If you switch lenders too close to closing, you may need to have a new appraisal done, which can delay the process.
Underwriting
Once your appraisal is complete, your lender will begin the underwriting process. This is where they verify your income, employment, and other financial information. If you switch lenders too close to closing, you may need to start the underwriting process all over again, which can delay closing.
Locking in Your Interest Rate
When you apply for a mortgage, your lender will give you an interest rate. This rate is not guaranteed until you lock it in. If you switch lenders too close to closing, you may not have enough time to lock in your interest rate, which could result in a higher rate and higher monthly payments.
How to Switch Mortgage Lenders
Switching mortgage lenders is not as difficult as you might think. Here’s how to do it:
Research New Lenders
Start by researching new lenders. Look for lenders that offer the loan options you’re interested in and have good customer reviews. You can also ask for recommendations from friends and family.
Apply for a New Mortgage
Once you’ve found a new lender, apply for a new mortgage. Be sure to provide all the necessary documentation, including income verification, employment verification, and bank statements.
Inform Your Current Lender
Once you’ve been approved for a new mortgage, inform your current lender that you’re switching. They will need to provide you with a payoff statement, which shows how much you owe on your current mortgage.
Closing
Once you have the payoff statement and your new mortgage has been approved, you can close on your new loan. Your new lender will pay off your old mortgage and you’ll start making payments to your new lender.
The Bottom Line
Switching mortgage lenders can be a smart move if you’re not happy with your current lender. Just be sure to do it at least 30 days before closing to avoid delays and ensure a smooth transition. With the right lender, you can get a great mortgage that fits your needs and budget.