How to Shop for Mortgage Rates After Your Commitment Letter

You just got your mortgage commitment letter. You're locked in at 6.75%. Then you see an ad: "6.25% rates available today!"

Your heart sinks. Did you lock in too early? Can you still shop around?

This is one of the most common questions on r/FirstTimeHomeBuyer, and the answer is more nuanced than you might think.

Short answer: Yes, you can shop for rates after getting a commitment letter—but you need to understand what you're risking and whether it's worth it.

Let's break down exactly when and how to shop for better rates after you already have a commitment.

Understanding Your Commitment Letter

First, let's clarify what you actually have:

A mortgage commitment letter means:

Your lender has approved your loan
Your rate is "locked" for a specific period (usually 30-60 days)
You're cleared to close, subject to final conditions
You've likely already paid for the appraisal ($400-$700)

What it does NOT mean:

You're legally required to use this lender
You can't shop around
This is definitely the best rate available

You're free to switch lenders anytime before closing. But there are costs and risks involved.

The Real Question: Is Shopping Worth It?

Before you start calling other lenders, ask yourself: How much would I actually save?

Rate Difference Calculator

Here's what different rate savings actually mean on a $400,000 loan over 30 years:

0.125% lower rate (6.75% → 6.625%)

Monthly savings: ~$30
First-year savings: $360
5-year savings: $1,800
Probably not worth the hassle

0.25% lower rate (6.75% → 6.50%)

Monthly savings: ~$60
First-year savings: $720
5-year savings: $3,600
Maybe worth it, depends on switching costs

0.50% lower rate (6.75% → 6.25%)

Monthly savings: ~$120
First-year savings: $1,440
5-year savings: $7,200
Definitely worth investigating

0.75%+ lower rate (6.75% → 6.00%)

Monthly savings: ~$180
First-year savings: $2,160
5-year savings: $10,800
Absolutely shop around

The Cost of Switching Lenders

If you decide to switch, here's what it will cost you:

What You'll Lose

1. Application/processing fee: $300-$500 (non-refundable)

2. Appraisal: $400-$700 (might be transferable, but usually not)

3. Credit report fee: $25-$75 (some lenders waive this)

4. Time delays: 2-4 weeks minimum to restart the process

Total hard costs: $700-$1,300

Total risk: Potentially missing your closing date, which could cost you your earnest money ($5,000-$20,000)

When Switching Makes Sense

Do the math:

If saving 0.5%+ on rate: Switching likely worth it
If saving 0.25-0.49% on rate: Borderline, calculate carefully
If saving less than 0.25%: Not worth the hassle and risk

Also consider:

How close are you to closing? (Within 2 weeks = too risky)
How complicated is your loan? (Complex situations = harder to switch)
Is your current lender responsive and professional? (Bad service = good reason to switch)

The Smart Way to Shop After Commitment

If you decide the savings justify the risk, here's how to shop smartly:

Step 1: Verify the Advertised Rate Is Real

That "6.25% rate" you saw might require:

Perfect credit (780+ score)
Large down payment (25%+)
Buying discount points (paying upfront for lower rate)
Specific loan type or property type

Before you do anything, call the lender and get these answers:

"What rate can you offer me specifically?" (Give them your credit score, down payment, loan amount)
"What are ALL your fees?" (Request a Loan Estimate)
"Can you close in [X] days?" (Match your current timeline)
"Do you accept transferred appraisals?" (Saves you $500-$700)
"What's your average time to close?" (Verify they can meet your deadline)

Step 2: Get It In Writing

Don't trust verbal quotes. Demand:

A Loan Estimate (LE)

Required by law within 3 days of application
Shows exact rate, fees, and costs
Legally binding estimates

Compare your current commitment letter side-by-side with the new LE:

Interest rate
APR (includes all fees)
Monthly payment
Total closing costs
Any prepayment penalties
Rate lock period

Step 3: Ask About Rate Locks

Critical questions:

"How long is the rate lock?" (You need enough time to close)
"What happens if rates go up before closing?" (You're protected)
"What happens if rates go down?" (Some lenders offer float-down options)
"Can I extend the lock if needed?" (Usually $200-$500 per 15-day extension)

Float-down provision: Some lenders let you lock a rate but "float down" if rates drop before closing. Ask about this.

Step 4: Check for Appraisal Transfer

This could save you $500-$700.

Ask both lenders:

"Can you accept a transferred appraisal from [current lender]?"
"What's the transfer fee?" (Usually $75-$150)
"What's the process and timeline?"

If your appraisal is recent (within 120 days) and meets Fannie Mae/Freddie Mac standards, many lenders will accept it.

Step 5: Understand the Timeline

Typical new loan timeline:

Application and initial disclosures: 1-3 days
Document collection and verification: 5-10 days
Appraisal ordered and completed: 7-14 days
Underwriting review: 3-7 days
Final approval and clear to close: 2-5 days

Total: 18-39 days minimum

Can you afford this delay? If your closing is in less than 30 days, switching is very risky.

Alternative: Negotiate With Your Current Lender

Before you switch lenders, try negotiating with your current lender first.

How to Negotiate Your Rate

Call your loan officer and say:

"I received a Loan Estimate from [Lender Name] offering [X]% rate with [Y] in fees. I'd prefer to stay with you since we're already in process, but I need you to match or beat this rate. Can you help me?"

What lenders can do:

Reduce or waive origination fees
Offer lender credits toward closing costs
Lower your rate (if they have margin to work with)
Provide rate float-down option

Why this works:

Lender has already invested time/money in your file
They want to close the loan and earn their fee
Competition scares them
Easier for them to negotiate than lose you

Success rate: About 50-60% of borrowers who negotiate get some concession from their current lender.

When You Should NOT Shop Around

1. You're within 2 weeks of closing

Too risky to switch now
High chance of missing closing date
Could forfeit earnest money

2. The rate difference is minimal (<0.25%)

Savings don't justify hassle, cost, and risk
Better to focus on closing smoothly

3. Your current lender is excellent

Responsive, professional, communicative
Hitting all deadlines
Easy to work with

4. Your loan is complicated

Self-employed income
Multiple income sources
Non-warrantable condo
Jumbo loan with special requirements

Complex loans are harder to transfer mid-process.

5. You're in a hot market with multiple offers

Sellers want certainty
Switching lenders creates uncertainty
Could cause seller to choose another buyer

How to Avoid This Situation in the Future

The best time to shop for rates is before you apply, not after you have a commitment letter.

Shop Smart From the Start

When house hunting:

Get pre-approved (not just pre-qualified) by 3-5 lenders
Compare rates, fees, and service quality
Choose the best lender BEFORE you find a house
Lock your rate when you go under contract

Ask these questions upfront:

What's your current rate for my situation?
What are all your fees? (Get detailed breakdown)
Do you offer rate float-down options?
What's your average time to close?
Can you provide references from recent buyers?
Do you sell your loans or service them in-house?

The all-credit-pulls-within-45-days rule: Multiple mortgage credit inquiries within 14-45 days (depending on scoring model) count as ONE inquiry. Shop aggressively within this window.

Consider a Mortgage Broker

What they do:

Shop multiple lenders for you (20-40 lenders typically)
Often get wholesale rates you can't access
Handle the application process
Usually no cost to you (paid by lender)

When to use one:

First-time buyer unsure where to start
Self-employed or complicated income
Want maximum rate shopping with minimal effort
Shopping on your own is overwhelming

Real-World Example: When It Worked

Sarah's situation:

Got commitment letter at 6.875% from her bank
Closing in 45 days
Saw ad for 6.375% from online lender

What she did:

Called new lender, confirmed rate for her situation: 6.50%
Got Loan Estimate in writing
Asked about appraisal transfer (they accepted it, $100 fee)
Verified they could close in 30 days
Called her bank's loan officer to negotiate

Result:

Her bank matched at 6.50% to keep her business
No switching needed
Saved $120/month without any risk

Total savings: $43,200 over 30 years by making one phone call.

Real-World Example: When It Didn't Work

Mike's situation:

Got commitment letter at 7.00%
Closing in 18 days
Friend told him about lender offering 6.75%

What he did:

Applied with new lender
New lender couldn't close in time
Requested 15-day closing extension
Seller got nervous, almost walked away
Had to pay for second appraisal ($650)

Result:

Finally closed with original lender at 7.00%
Wasted $650 on duplicate appraisal
Wasted 2 weeks of stress
Almost lost the house

Lesson: Don't shop too late in the process.

Bottom Line: Should You Shop After Commitment?

Yes, shop around if:

You're saving 0.5%+ on your rate
You're more than 4 weeks from closing
You found a reputable lender who can close on time
The numbers clearly justify the risk

No, don't shop if:

Rate savings are minimal (<0.25%)
You're within 3 weeks of closing
Your current lender is reliable and professional
Your loan is complicated or unusual

Try negotiating first: Before switching, always try to negotiate with your current lender. Show them competing offers and ask them to match.

Make Smart Offer Decisions from the Start

Shopping for rates is important, but don't forget to make smart offer decisions too. Before you make an offer on your next property, use offer.guide to get data-driven analysis of fair market value, appraisal risk, and competitive offer strategies.

Analyze Your First Property Free →

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