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We have talked with a mortgage broker about the rate and potential mortgage. And we asked them to lock the rate and prepare for bank appraisal. But we have not signed anything with the broker yet.
Recently, we felt the the broker is kind of "bait and switch". We were locked with a pretty good rate. But later the broker told us that the rate has to go higher.
We are thinking about switching to another broker. But this broker told us that there will be a penalty if we leave them.
Is this legal to have penalty on us by the broker?
If you haven't paid them, walk away fast. They can't charge you for anything.
Credit report and appraisal fee have always been part of the application fee when I've paid one, or scheduled seperately with no app fee. Doc prep fee is pretty standard up to about $300.
You have no obligation to them at this point- you got a quote, they changed it and you no longer feel like they are the best fit for you.
Doc prep fee- hit print- BS Fee
Credit score fee- credit pulls cost but not more than $20 for a joint report- never charged for one just a cost of doing business.
Application fee(if upfront)- afraid of losing you to another broker or lender so you have somehing else to weigh in the decision. If at closing- no problem.
No way, a LOE (letter of explaination) can easily show the multiple inquiries are from mortgage companies and the reason why they are showing up on the credit report.
Unless you signed something stating an application fee must be paid upfront, then you should flee from this scumbag immediately, and report them to HUD as well as their state regulating body.
If you were locked, then the broker is doing you wrong. There is no penalty for switching. You should be comfortable with the broker and with the loan you are getting. Not knowing all the facts, there is the possiblity that there was something in your file that caused an increase (credit score, higher loan to value than originally proposed etc.) But your broker should have communicated that to you. As someone involved with the original efforts to license brokers here in Texas, you should report this broker to the commissioner (Doug Foster) or his assistant (Sandra Weller) if you feel they did wrong. That is the only way we can keep the consumer protected from those who don't do what they should. If I can help by answering any further questions, please do not hesitate to ask.
We have talked with a mortgage broker about the rate and potential mortgage. And we asked them to lock the rate and prepare for bank appraisal. But we have not signed anything with the broker yet.
Recently, we felt the the broker is kind of "bait and switch". We were locked with a pretty good rate. But later the broker told us that the rate has to go higher.
We are thinking about switching to another broker. But this broker told us that there will be a penalty if we leave them.
Is this legal to have penalty on us by the broker?
Thanks.
A few things confuse me here.
If you signed nothing, how did the broker lock a rate for you?
When you asked them to lock a rate and prepare for appraisal, what exactly happened? Had they, at that point, already checked yrou credit, assets and income?
How can you "switch" brokers if you have done nothing to commit to this one? If you haven't committed to this broker, then you are just shopping around, and there is no switching necessary. You simpky decide to not use this one.
What penalty does the broker say you will incur, and by whom will the penalty be assessed?
People looking to get mortgages do not need to use mortgage brokers at all, this is a new real estate practice in the last couple of dozen years. You can go directly to your local bank or credit union yourself and apply or inquire. Sometimes the local paper will have a section that shows nearby bank mortgage rates for comparison. A small deposit at a credit union will make you a member generally regardless of the name affliliation and you won't end up paying the addl fees for a mortgage broker's services. The advantage of hiring a mortgage broker is for them to find the best rate for you however you can do this in a more limited fashion yourself and might come out better.
Many fees/points can be negotiated (bank, credit union, mortgage broker) and some can be eliminated. It is best to educate yourself on the most advantageous type of loan to obtain and the actual interest paid due to the length of the mortgage vs monthly payment according to your personal circumstances and needs. My personal preference is for credit union financing, fixed rate, and the shortest length of time possible that I can carry. Educating yourself will put you in better control.
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