NFCU mortgage rate lock extension?!?

[kelsilee1031]

Our initial closing date was on 08/29.

It was delayed to 09/29 in July. 
Now it's delayed again to 10/20.

Our locked rate will expire on 09/08. However, we are able to pay 0.125% point to extend 30 days. It will extend it to 10/07 which is 13 days before the closing. Our loan processor offers 3 options. 

1. Free of charge 30 day extension at 5.375%. After it expires, It will subject to the higher of the locked rate or current market rate.

2. Another 0.125% point to extend another 30 day at current rate of 4.5%. After it expires, subject to the higher of the locked rate or the current market rate.

3. Let the rate expire and sit for 30 days. Once the rate has sat for 30 days from rate expiration, we can revert the rate to float and it will be as if the rate was never locked. It will subject to whatever market rates are at that time, which is 30 days from rate expiration.

Which option do you think it's the best route?

HELP!!!! 😭

[pizzadude]

How much are you borrowing ?   Have you done the math on this yet in terms of the higher monthly payments at ~5.375% vs 4.5% ? 

Also what is the cause of the continuing delays in closing, is it construction related ?

[kelsilee1031]

@pizzadude 
We're borrowing $300K. 30 year VA loan. 0 down. 

The monthly payment will be $160 in different. 

it is a new built home. The delay is caused by Centerpoint not be able to deliver transformers in time. 

[pizzadude]

Well if you can't lock it beyond 30 days then it looks like you're going to be out of luck for the 10/20 date.  Would NFCU offer you the chance to pay for another 30-day lock on 10/08 at your 4.5% rate?

Do you have any recourse from the builder on this?  Have they offered any discounts, upgrades, etc.. to account for the delays?

[CreditFun]

Option 4, have seller give you credit to buy down the rate.

[ShanetheMortgageMan]

Since you cannot close prior to Oct 20th + if there is no possible way for NFCU to extend the rate lock past 30 days (even if you pay additional extension fees) then option 3 sounds like the best route, as there is no cost like option 2 has and you are able to possibly get a better rate than option 1's 5.375%.  Option 1 you aren't even guaranteed to get 5.375% since that rate lock will expire prior to closing, so you'd still be subject to the higher rate between 5.375% or whatever the market is... but with option 3 you'll be able to lock in current market rates after 30 days (there'd be a possibility of getting a lower rate than 5.375%).

[Gladius]

With these current outlandish rates and the continuous rise, I sometimes think it is all a conspiracy theory and the banks are in cahoots with the builders to intentionally extend closing dates....smh  the house being built next door to ours has been in the "building" stage for over two years now (since the family signed the contract).  They said they were thinking about backing out of it and just find an already built (cheaper) house because their initial estimated payments have almost doubled now.

[ShanetheMortgageMan]

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@Gladius wrote:

With these current outlandish rates and the continuous rise, I sometimes think it is all a conspiracy theory and the banks are in cahoots with the builders to intentionally extend closing dates....smh  the house being built next door to ours has been in the "building" stage for over two years now (since the family signed the contract).  They said they were thinking about backing out of it and just find an already built (cheaper) house because their initial estimated payments have almost doubled now.

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There is really no benefit to the department that originates mortgages to delay a closing + no legal mechanism the lender can impose to delay a closing.  At all the companies I've worked at every single person involved is being pushed to do their part more quickly, even management teams will often ask if closing dates can be pushed up on loans in the pipeline.

In your neighbors situation the builder could be dragging due to increased build costs + supply delays.  If the builder didn't have a price escalation clause in the contract then they might not see any profit, hoping the current buyer bails so they can re-sell the home at a higher price.  The allure of a brand new home can have its drawbacks.