HELP Closing next week WHEN TO LOCK RATE?!?!?!

[Anonymous]

Hello Everyone!

My rate lock expired a month ago and was told by my LO I could not lock another rate until today.  He then suggested we wait a couple days.  I am very concerned after reading the mortgage rate predictions and that they are only going UP. 

So here are my questions:

Why did I have to wait 30 days after rate lock expired to lock in my rate again?   I was locked at 4.5%

Right now the rate is at 5.1% - how much does that affect my payment on a 30 yr fixed fha?  Purchase price $200,000.

Should I call and have him lock it today or hope it goes down when all the rate sites are blowing up about the rates even getting higher?

Should I be trusting my LO because right now I feel a little bit deceived.

This is my first time buying a home and it is making me sick!

THANKS a lot to anyone with any advice.

[Anonymous]

I hope your mortgage contingency has a cancel clause in it for a benchmark rate.   Before I could lock my GFE was 4.25% and I put my contingency at 4.5% and rates went to 4.375% before I finally got my lock, so I had to pay that fraction.

In your case, you could kill the whole deal and walk if your contingency was triggered, that is IF you have one.   You need to check your Agreement of Sale to see what you signed.

That said, this is how I feel about your LO.   He is skimming you for every penny.    Rates have been trending up for weeks now and they're accelerating in speed now because Treasury bills have been selling off like crazy (your mortgage rate is indirectly tied to how much interest 30 year T-bills pay out in interest).   If your LO is telling you to delay, delay and delay and don't lock---you're just getting suckered.    

If you lock next week you could be paying almost 1% higher and if you wanted the original rate, you'd need to prepay that point.   So 1% of $200,000 is $2,000 you just lost.

[Anonymous]

Thanks for replying, PhillyGuy...

I'm going through my mortgage docs right now and can't really find any "contingency" anywhere. 

Here are the facts as I read them:

My rate lock was good for 45 days beginning Aug. 1.  So after reading that it expired somewhere around Sept. 15th...

This house is a short sale and finally they accepted my offer 2 weeks ago.  My LO said they did not do rate extensions so had to wait until TODAY until I could lock in a rate again.  It just doesn't make sense to me.  Why I couldn't have locked in 2 weeks ago....when the rates were lower.  He talks in all his mumbo-jumbo "30 days for this 30 days for that" blah blah I'm confused!

If he doesn't give me a reasonable answer for this tomorrow I have it in my mind to start over with another lender - but don't even know if that is worth the hassle since I'm supposed to close next week.  The seller's bank is paying closing costs so my LO said we would buy points with some of that money... but I really don't know what to ask for or what is fair.  I have researched all of this and feel like I just don't understand it all!

Any mortgage guys out there willing to explain "Rate Locks and Points" for "dummies" like me?????  THANKS!

[Anonymous]

OH and I did find a calculator which estimated how much more my payment would be being at varying interest rates.. so dont need an answer for that!

[RammaCredit]

I would call the lender and  ask for a supervisor. The LO is probably trying to get a highr commission, you should have been able to lock in your rate.Also did you shop around?

[ShanetheMortgageMan]

When your rate expires you need to wait 30 days in order to lock in a better rate (if available), or else people would just lock in interest rates and let them expire all the time.  When an interest rate is locked the lender make a commitment with the secondary market to deliver that loan at that interest rate, and if they don't, then they usually have lost money.  You can re-lock within the first 30 days after your rate has expired, but it'd be at worst case scenario, meaning you will always get the worse rate between when you originally locked in and the current rates.

[Anonymous]

SO HAPPY!

OK My LO is NOT a jerk!  I didn't ask enough questions and it is absolutely MY fault.  Turns out we had already done 3 extensions.  If he had extended again it would have cost me another 1/4% of loan. 

I didn't ask enough questions and when I did he answered everything to the best of his ability to help me understand.  We are locking in the rate today at 4.75.  Also, we will use some of the sellers closing money to buy points so it will bring my interest rate back to around 4.5 where it was in the first place!  I feel sooooo much better!

Thanks for all of your answers!

[Anonymous]

It's the end of the day and STILL NO RATE LOCK.

LO said something "internal" was keeping them from locking it.  I am so frustrated now I could scream.  I was told this morning it would be locked today.  Over and over that I would get the lock. 

Is something wrong here?!?!?!?

[ShanetheMortgageMan]

Rates changed on Friday for the worse, there were a few lenders who suspended their lock desk until the market stabilized.  Kind of like when the stock market is sinking so fast that trading is halted in order to try and get investors to cool off and reevaluate their positions... rate lock desks may close due to the mortgage backed security market being too volatile.  A lot of people, even loan officers, don't comprehend that part of the business so it's easier for the lock desk tell a loan officer, processor, etc. that there are "internal issues".  Just one possibility of what went on.  That was a few days ago though - what has happened since then?

[Anonymous]

Shane,

STILL NO RATE LOCK.  I am very frustrated.  Apparently my LO hasn't gotten final paperwork from UW.  I had to go through loan process again because commitment expired.  But it's been 30 days. 

I was supposed to close yesterday and still no word from my LO.  Also, he refuses to lock rate saying I can only lock again for 2 weeks then have to wait a month because I extended three times already.  My LO told me I was going to close yesterday but then thinks it's too risky to start the rate lock now?  Confusing! 

I don't know what to believe... but again today the interest rate has gone up another quarter % so it's very disappointing.

Should I demand the LO lock my rate?  Or watch it rise until I can no longer afford the home? (trying not to cry)

Thanks a lot for your responses.