A dual-apper is a street term used to describe borrowers who simultaneously apply for loans through two different loan brokers.
Sometimes because of the fear of uncertainty, home buyers might apply with various mortgage brokers, especially when they are buying a house for the first time.
This could be because:
- They think that pitting one against another will provide negotiation leverage
- A broker gave a bad impression leading to the borrower going to another
- Going to another broker from a friendly recommendation even after applying with one already
- Thinking it’s what they are supposed to do
- Closing date is approaching and they are getting nervous
Whatever the reasons, while it might really provide a little extra bargaining power against a broker, such consumer behavior is loathed upon by brokers.
In fact, it can often lead to less motivation from the brokers to help the borrower finalize the best deals simply because they assume that the borrower would end up with the alternative broker.
Unlike real estate agents who ensure (force?) their customers sign exclusivity contract to appoint them as their sole agents, mortgage brokers basically do not practice such business standards.
This is because they are aggregators and are fundamentally promoters of the free market.
So while they leave the door open for a borrower to try someone else, it’s something that can really turn them off.
Imagine going through all the work of loan sieving only to have the client take up a loan with a competitor who is essentially offering the same loans.
Unless we are talking about brokers who promote predatory lending, I cannot encourage borrowers to be dual-appers.
This is because are there to help borrowers. And they only get paid should a loan goes through. Giving them the run-around and eventually denying them from being paid is just bad karma.
Their reputations took a beating in the aftermath of 2008 due to the unethical practices of a handful of operators.
Most of them are really people and service orientated businesses who would love no better to help their customers find the best mortgages that they qualify for.
Yet should you step on their tails by double-apping, you are unlikely to see the best of them.
If your concerns are their charges which led you to stray, why not just go direct to an upfront mortgage broker (UMB) instead.
Upfront mortgage brokers are brokers who quote their fees upfront which can give the borrower more peace of mind.
However, there’s nothing stopping the borrower from dual-apping too.