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You get to pay for the privilege of paying too much :-\

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sr383
Regular Contributor

You get to pay for the privilege of paying too much :-\

My loan was "pre-approved," but I've discovered that this is the world's greatest misnomer. I made an offer on Aug 21, based on a pre-approval from our lender, and we're still not clear to close. The rate lock is set to expire on Sept 25, and the lender wants to charge us half a point to extend the lock, despite the fact that the lender's current rates are actually lower than the one we locked. :-o

 

It's all the more annoying, given that:

 

  1. Our loan officer quit/was fired, and we were never told. (I still haven't officially been told. My Realtor found out when he called to ask for him.)
  2. The lender had agreed that the appraisal would not happen until we'd completed the inspection and signed off on repairs. Instead, the appraiser showed up during the inspection. Thus, he set a value based on what he saw, not based on the actual condition the house will be in when we move in. Furthermore, the inspector based his value on 600 square foot less than the actual size of the house. He acknowledged that when he spoke to my insurer about the discrepency, but he has no plans to update his appraisal. (We came in at $10,000 more than the sales prices, but I'm wondering if a higher appraised value might reduce the amount of time we're on the hook for PMI.)
  3. The final required piece of documentation was not requested until Tuesday of this week (letter from JPMorgan sourcing the funds we'll be using for the deposit and closing costs), but it may take 7-10 days to secure that information. Had the lender made the request earlier, we would have easily met the Sept. 25 deadline.

Question: Do I have any realistic alternatives to coughing up half a point? I'm actually tempted to walk away from the deal, entirely, but I'm not sure what sort of penalities I'd face. Obviously, I'd lose the cost of that awesome appraisal, plus the quarter point I paid to lock the original rate, plus the $50 credit report fee. But if I closed with someone else at current rates, my savings over the life of the loan would actually exceed all of that. But given the slimy nature of this lender, I can't help thinking there are other penalties that I'm not even imagining.

 

Thoughts?

 

 

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7 REPLIES 7
foofighter74
Established Contributor

Re: You get to pay for the privilege of paying too much :-\

If your rate lock expires, won't you just be given their current rate, which is lower anyway? Seems like there's no reason to pay to extend the locked-in rate.

Message 2 of 8
sr383
Regular Contributor

Re: You get to pay for the privilege of paying too much :-\

The lender says that, because I was stupid enough to lock the rate, I have to keep locking the rate. (I'm paraphrasing, here.) Simply put, there is no transaction unless I pay another half point.

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frugalQ
Valued Contributor

Re: You get to pay for the privilege of paying too much :-\

that doesn't sound right.  if the current rate was higher, they will be quick to tell you 'if you dont lock again, you will get the higher rate'.

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Message 4 of 8
foofighter74
Established Contributor

Re: You get to pay for the privilege of paying too much :-\

Do you have a copy of the actual lock in agreement you actually signed?

 

I just looked at mine, and all it basically says is that if the agreement expires, you "may" have to pay a higher interest rate if the rates at the time are higher. 

 

I would check first to see if the document you signed says you MUST keep paying to extend the agreement.

Message 5 of 8
frugalQ
Valued Contributor

Re: You get to pay for the privilege of paying too much :-\

basically, the pre-approval means  that you are "approved to begin your journey through Hades (good luck with making it out alive)".  LOL

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Message 6 of 8
DallasLoanGuy
Super Contributor

Re: You get to pay for the privilege of paying too much :-\

When locks expire and rates are better, your loan gets re-locked for free.

At least, with every company I have ever worked for.

 

 

 

 

Retired Lender
Message 7 of 8
sr383
Regular Contributor

Re: You get to pay for the privilege of paying too much :-\

Good to know. The lender was claiming "all lenders do it this way."

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