MortgagesUndressed

What do I mean by the heading up 1/8% and down 1/8%? Today we had a slight upward shift in the rates (1/8%) but our boy John Daly is within 10 days of the closing date. With a 10 day lock he can have that 1/8% back. The shorter the time period of the lock the lower the rate (usually). Now it gets real sweaty for the professional loan officer.

John wanted to float. That is obviously for a better rate. Well he can have an 1/8% better rate if we can close in 10 days. Close means funded. From today to close we must have all conditions signed off by the underwriter. For example: the appraisal should have been reviewed by the underwriter and perhaps there is a problem with it. It isn’t unusual to see the underwriter ask for another comparable to be provided by the appraiser. Maybe the value is in question and finding one more home sold that is similar could help support the value. All conditions like this must be provided and accepted before documents can be drawn.

Once conditions are signed off and the loan is cleared to close, the loan must be locked, the documents created, an appointment for signing at escrow, the signing, the signed documents returned to the bank funding department for review, the money ordered and wired to the escrow company, approval to record and fund, and finally funding.

Are we ready for a 10 day lock? That is the only way John gets a better rate. What happens if all of the above takes 11 days? In this case John could lose his rate. He is at the mercy of the lender. It is not unusual for the lender to extend the lock but raise the rate or the fees a little bit. If that happened it could be worse for John. My advice, lock for longer period than 10 days if you are locking today or continue to float. It is the customers responsibility to make this decision. Not the loan officers.

What would you do? John if you are there, what would you do? Larry