Personal Finance

Can I apply for mortgage at more than one bank at the same time?

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  • Apr 29th, 2009 10:57 am
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[OP]
Jr. Member
Aug 23, 2007
116 posts
Toronto

Can I apply for mortgage at more than one bank at the same time?

I'm on a time limit. I have about 5 days to get a mortgage commitment letter so I can show it to the builder. I applied for a mortgage at one bank. But in case it doesn't go through, should I apply at two more banks at the same time? Do people usually do that? Does it lower your credit score? Another questions, once the bank checks your credit, and offers you mortgage commitment, and supposes you decide to go with them, would that bank check your credit again...when they have to issue the funds...for example, in my case the closing date is Sep 2009? Also, what happens when its' time to re-finance? Do banks check your credit again to refinance you? What if you re-finance with the same bank?
18 replies
Deal Addict
Sep 22, 2007
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Yes you can apply at multiple banks if you want. It doesn't lower your score to apply at different banks in the time frame, banks know you shop around so it doesn't affect your rating.
Member
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Apr 1, 2009
406 posts
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You should get a broker if you want to apply at multiple banks.
They actually do the work for you, and they only hit your bureau once.
This will save you your credit score, time, and effort.
[OP]
Jr. Member
Aug 23, 2007
116 posts
Toronto
tophomeloans wrote:
Apr 22nd, 2009 8:59 pm
You should get a broker if you want to apply at multiple banks.
They actually do the work for you, and they only hit your bureau once.
This will save you your credit score, time, and effort.
Yes you can do that but the catch is that once you sign a mortgage commitment through a bank that they find you, you have to stick to that bank unless you have to pay the commissions owing to the broker out of your pocket if the transaction does not close. Now this is good for people that are let say closing within the 30 day period but not good for people that are trying to qualify for a mortgage now but the closing date is lets say Sep/Oct 2009 or even longer, for these people that options of shopping around is done.

The broker is qualifying you with the banks on a rate that is posted today; while the bank will lower the rate that they quoted if the rates fall *(suspect that is same for a bank that we might choose with a broker).
Newbie
Apr 19, 2007
45 posts
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Montreal
p_dhaliwal wrote:
Apr 23rd, 2009 10:27 am
Yes you can do that but the catch is that once you sign a mortgage commitment through a bank that they find you, you have to stick to that bank unless you have to pay the commissions owing to the broker out of your pocket if the transaction does not close. Now this is good for people that are let say closing within the 30 day period but not good for people that are trying to qualify for a mortgage now but the closing date is lets say Sep/Oct 2009 or even longer, for these people that options of shopping around is done.

The broker is qualifying you with the banks on a rate that is posted today; while the bank will lower the rate that they quoted if the rates fall *(suspect that is same for a bank that we might choose with a broker).
I am in this situation, signed a commitment letter with a bank through a broker in February but only closing at the end of May. Now if I go with another bank that I find on my own with a better rate (like the CIBC quick close cash back deal) what is the commision I have to pay to the broker and why do I have to pay that (in the contract signed with the broker there is no fees of that type if I recall correctly).

Also, does people do that a lot, signed a commitment letter with bank #1 and then turn around and signed another commitment letter with bank #2? What does bank # 1 do about this?
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Dec 12, 2005
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the more your credit history is pulled the lower your scores.I think after a few months if you do not apply again the score will go back to the starting level.
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p_dhaliwal wrote:
Apr 23rd, 2009 10:27 am
Yes you can do that but the catch is that once you sign a mortgage commitment through a bank that they find you, you have to stick to that bank unless you have to pay the commissions owing to the broker out of your pocket if the transaction does not close. Now this is good for people that are let say closing within the 30 day period but not good for people that are trying to qualify for a mortgage now but the closing date is lets say Sep/Oct 2009 or even longer, for these people that options of shopping around is done.

The broker is qualifying you with the banks on a rate that is posted today; while the bank will lower the rate that they quoted if the rates fall *(suspect that is same for a bank that we might choose with a broker).
This does not make any sense.
Andre Oliveira - Mortgage Agent
Mortgage Intelligence - FSCO# 10428
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Mar 14, 2005
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PascualPitch wrote:
Apr 23rd, 2009 11:34 am
Also, does people do that a lot, signed a commitment letter with bank #1 and then turn around and signed another commitment letter with bank #2? What does bank # 1 do about this?
I'm about to do the same thing.. Buying a brand new home, won't be ready till fall/winter 2009-2010. From what I can see and the questions that I've asked them (the banks), there is no problem signing two or more commitments. I'm waiting for the paperwork and will read the contract to see if it say different.

I'm hoping with multiple committments signed, it will give the competing banks more incentive to give their best rate at closing, knowing that there are multiple commitments. Otherwise, why would a bank/FI give you a lower rate once you sign a commitment???
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Dec 11, 2008
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p_dhaliwal wrote:
Apr 22nd, 2009 9:14 pm
thanks guys.

I should have noted. I did go to a mortgage broker, he said my common law can't qualify since his score is 555 and mine is about 780+. Plus he said that the mortgage amount is really close to not getting qualified, given the low interest rates and our salaries. Our combined income is about $88K*(but the broker used an lower amount - the average salary from 2007-08 for mine and his, which i think was not right) because you usually get paid higher or the same (not lower) as you go forward if you stick with the same job. Anyhow, i'm on salary and he is on hourly. The mortgage we are trying to get is about mid 300's. What I dont' get is that I got pre-approved from RBC for over $350K and here broker is saying I can't touch this. Now I'm going to another bank to see If i qualify but since i'm on a time crunch, I was wondering if i can go in and apply at two more banks, in case the other bank leaves me high and dry.
That's very tight, mid-300's. I made over $70k when I applied and they weren't too sure to give me $275k even though I had a long employment record in a unionized government job with a very good credit score.
[OP]
Jr. Member
Aug 23, 2007
116 posts
Toronto
xstatik wrote:
Apr 23rd, 2009 11:49 am
I'm about to do the same thing.. Buying a brand new home, won't be ready till fall/winter 2009-2010. From what I can see and the questions that I've asked them (the banks), there is no problem signing two or more commitments. I'm waiting for the paperwork and will read the contract to see if it say different.

I'm hoping with multiple committments signed, it will give the competing banks more incentive to give their best rate at closing, knowing that there are multiple commitments. Otherwise, why would a bank/FI give you a lower rate once you sign a commitment???
So that's how you do it. When you go to talk to a mortgage specialist, do you actually tell them that you have already applied or got a mortgage commitment from another bank A or do you wait until you get a commitment from bank b and then tell them hey bank A offered such and such what's your offer?
[OP]
Jr. Member
Aug 23, 2007
116 posts
Toronto
laptop-tech wrote:
Apr 23rd, 2009 11:48 am
This does not make any sense.
Let me re-phrase it in a way you understand.

When you go to a mortgage broker, they make you sign a agreement that they or the company they represent will get paid 1.5% or 1% of the mortgage if they help you find a bank that you choose to go with and you can't back out once you have signed a commitment letter with the bank *(that they helped you find), otherwise you would have to pay out of your own pocket. Which is fair!

But my argument is that as a buyer this leaves you with limited options; given the buyer is not closing within the next month or two. Lets say for example: You are buying a brand new house, the closing date is up until Sep 2009. But the seller needs confirmation from you that a lender will lend you money. So you go to broker and he finds you a bank A that will lend you money. Bank A provides you with a commitment letter saying the interest is 3.69% *(or 1.8% off of the posted rate) and you sign it and take it to the seller. Everything is fine and dandy.

Now comes Sep 2009, lets just say for argument sake the fixed interest rates increased by 1/2 of a percent. Now the bank you chose to go with is offering 4.15% but you have been doing your shopping and you find out that Bank B is offering a sweet deal at 3.65%. Now what do you do? You can't break the contract with bank A because you already committed yourself to bank A through the broker. When you chose that bank through a broker, the agreement usually says that once you sign a commitment letter with a bank that they help you find, you can't break the contract otherwise you would be liable for the commissions. Now unless you want to dish out that money and break the contract you are free to do that.

Now its different when you go directly to the bank and get a commitment letter from them. In this scenario, you are not obligated to stick to that bank *(unless there is a clause in the fine print that says otherwise). So you can go to another bank get a commitment letter from them and see which one offers the best rate.

I hope I've made myself clear than before. Capice everybody!

I mean I am not against brokers. I think its only fair that brokers have to put that clause in their so they know they are going to get paid at the end of the day. But its limits buyers options when the closing date is not within 30-60 days. My recommendations is go with a bank first. get a commitment letter. when it comes time to close within 30 days, go talk to your broker and get him to find a bank that will beat the rate that was offered by the bank which he most likely will. This way works out for everyone except for the big bank.
[OP]
Jr. Member
Aug 23, 2007
116 posts
Toronto
Few other things I have learned along the way when shopping for mortgage.

- Look for how long the bank will commit their rates for? usually 90 days. 120 days even better or longer. some can keep it for few months.
- to a point...don't be focused on the rate that each bank is committed to, focus on the discount that they are giving you off of their posted rate because when it comes time to close it is the discount that going to matter as the rate you will get at closing time will be lower of either the promised discount off of the posted rate at the time of the closing or the promised discount off of the posted rate 90 days *(or whatever days they promise you) before closing.
- sometimes it might matter which credit agency the banks/brokers are pulling your credit score. it could make or break you *(as in my case). Ask upfront. A competitive mortgage specialist will let you know. It can save you a disappointment and a credit hit.
- Oh yeh! before you go to the bank, check your credit score. Usually the minimum requirement is 600+ (of course there are exceptions).
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p_dhaliwal wrote:
Apr 23rd, 2009 8:20 pm
Let me re-phrase it in a way you understand.
I understood what you said before. I said it did not make sense because unless you do not qualify for a mortgage and have a very difficult situation, brokers should NOT charge you a penny and should NOT force you to accept any mortgage, no matter what.

I got commitment letters before and used different brokers and was NEVER charged a penny or forced to close the house using the product they helped find. The BANKS pay the broker to find and qualify clients, and if they choose to take the business somewhere else, its perfectly normal.

My point is that you are wasting time and resources going from bank to bank, when the banks in many cases dont have rates as good as the ones a broker can get you, and NO ONE should charge you anything. If your broker says you must pay him a 1% fee (sometimes referred to as "originator's fee) then you need a better broker. Clearly you are not dealing with the right person.

I sent you a PM suggesting you should contact an experienced person, like Wonderdollar. Did you call him ?
Andre Oliveira - Mortgage Agent
Mortgage Intelligence - FSCO# 10428
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Apr 19, 2007
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laptop-tech wrote:
Apr 23rd, 2009 8:54 pm
I understood what you said before. I said it did not make sense because unless you do not qualify for a mortgage and have a very difficult situation, brokers should NOT charge you a penny and should NOT force you to accept any mortgage, no matter what.

I got commitment letters before and used different brokers and was NEVER charged a penny or forced to close the house using the product they helped find. The BANKS pay the broker to find and qualify clients, and if they choose to take the business somewhere else, its perfectly normal.

My point is that you are wasting time and resources going from bank to bank, when the banks in many cases dont have rates as good as the ones a broker can get you, and NO ONE should charge you anything. If your broker says you must pay him a 1% fee (sometimes referred to as "originator's fee) then you need a better broker. Clearly you are not dealing with the right person.

I sent you a PM suggesting you should contact an experienced person, like Wonderdollar. Did you call him ?
I guess it depends which brokers you use. I even heard that some brokers charge you a fee even if you do not sign a commitment letter with a bank they found.
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Mar 14, 2005
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p_dhaliwal wrote:
Apr 23rd, 2009 7:58 pm
So that's how you do it. When you go to talk to a mortgage specialist, do you actually tell them that you have already applied or got a mortgage commitment from another bank A or do you wait until you get a commitment from bank b and then tell them hey bank A offered such and such what's your offer?
Only one bank knows about the other one. The situation I'm in is buying a brand new build. I was working with someone who can only hold rates for 120 days, while the builders on-site mortgage rep can hold rates for 18-20 months (albeit a bit higher rate).

I'm using the longer held rate as a hedge in a worse case scenario that if my home gets delayed, and/or mortgage rates skyrocket (anything is possible), I'm locked in at a lower rate.

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