Is it bad to have 2 separate loans in the underwriting process, with 2 separate LOs? How close to closing do you have to decide which company to go with? Do you just tell the one you don't want that you're going with a different lender? This is for FHA.
Yes. Just tell one that you want to go with a different lender. Besides how can they underwrite and order appraisal when they're allowed only 1 FHA Case number. That will send red flags all over the place between the two lenders.
I think you should let the one you are not going with know now. This involves time and put yourself in the lender's shoes. Don't wait till it gets to closing before deciding.