What is a Dual Apper
A dual apper is a nickname used to describe a potential mortgage borrower who submits two mortgage applications to different mortgage brokers without their knowledge. Some applicants will use this strategy in an effort to guard against potentially duplicitous brokers who look to charge extra loan fees and associated charges after a mortgage application has been submitted and before the price has been locked down.
BREAKING DOWN Dual Apper
Dual appers can be a point of contention for mortgage brokers too. The argument is that the practice of dual-apping requires brokers to raise their costs because they have to charge enough to cover their investment in the mortgage application process. The rationale given is that mortgage brokers have to find a way to mitigate, or counteract, the risk of dual-apping by potential borrowers.
The cost of losing out on a loan can be substantial, both from the perspective of finances and time. Unfortunately, this sometimes leads brokers to engage in questionable business practices in an effort to protect their own interests. Common practices can include raising interest rates, increasing fees, adding on service fees and delaying the loan origination process.
Dual appers, or those thinking about dual-apping, would likely better serve all involved by requesting to know the price of any services rendered before the mortgage application process begins. By most accounts, this is a simpler and more straightforward strategy than submitting two separate mortgage applications. Among the positives, it eliminates several unnecessary steps, namely having to take the time to submit multiple mortgage applications. It is also fairer for the participating broker. The price itself cannot be locked in prior to proceedings getting under way, but the buyer and the broker can reach an agreement about any and all service fees that may be included.
Upfront Mortgage Brokers Possible Option for Dual Appers
Another option comes by way of upfront mortgage brokers. An upfront mortgage broker sets a fee for the services to be rendered at the start of the process and acts as the borrower’s agent to find the best mortgage in the market. Customers are responsible for the broker’s fee and the wholesale loan prices, the disclosure of which customers can request. This feature eliminates the risk of a regular mortgage broker potentially adding an additional fee to the wholesale price.
Additionally, upfront mortgage brokers give customers any rebates received throughout the process, whether from lenders or those selling their home, which in other circumstances could increase the broker’s fee beyond the original agreement.