Rate Lock Question-USDA

[Anonymous]

Hi!  After an unbelievably long and draining process we were finally approved (cleared conditions) for a USDA loan here in FL.  We signed a rate lock on 5/13 that expires 6/12.  We purchased points to get our rate down to 4%.  Since we locked, the rates have dropped significantly.  Our closing is scheduled for 6/28, we want to keep the 4% but what are the chances when the rate lock expires we have the ability to utilize the current rates rather than what we locked at? We would have to pay much less or nothing with today's rates to get it down to 4... Does a rate lock automatically renew or do we have to sign something?  This lender (builder's lender) has been a NIGHTMARE so asking her is pretty useless, figured I would start here.  

Thank you in advance!  

[NC_Mtg_Loaner]

Notify your builder that their preferred lender is not meeting your expectations ASAP.  It's likely too late, but they need to know that it's costing them business.

Next, reach out to your lender ASAP to find out about their interest rate lock drop down policy.   Chances are you might be eligible to extend the rate lock long enough to cover you to closing and use whatever credit is available to you due to the rates dropping to pay for it.   If there isn't enough credit for a "no-cost" rate lock buy down and extension for you then see about their "re-lock" policy.   Most banks require at least a 30 day wait before you can re-lock without additional costs, fees and/or penalties, but you certainly want to become aware of it.   

In this market, being advised to pay points to buy the rate down a couple months' ago was pretty silly and not very insightful, but it's been done and can't be undone so now you just want to see if you can correct  your situation.   Not sure if delaying your closing to fit a 30 day wait period would be ideal, but it might help with the rate lock issue possibly.

Good Luck

[Anonymous]

Thank you so much for your reply.  There are not enough words to describe how AWFUL the lender is.  We have made the builder aware that's for sure.  If it wasn't for the amazing processor we were just assigned on Thursday, we would still be in limbo.  We are finally at borrower final approval!  Just waiting for builder to submit a few things and our file will go to USDA.  I just emailed the originator about the rate.  Unfortunately we are already homeless (family of 6 in a one bedroom efficiency ) as the rental we were in sold right out from under us.  So waiting 30 days wouldnt' be an option.  I'm sure we are stuck, but it definitely doesn't hurt to ask.  Thanks again for your feedback!

[homeloanexpert]

I am so sorry! Your story is one I hear constantly. Seems for some reason, preferred lenders think they have an endless supply of potential applicants and all good practices and customer service go out the window.

I personally follow the market like a hawk and offer my expertise to my clients. I educate them and we come to a consensus on whether or not lock or floating the rate. Most good LOs knew the rates were going be dropping.

Also, I never advise borrowers to pay points unless they have to qualify or this is their keeper home where they will stay put.

Last, I would speak to your LO and see if they have a float down policy, where if the rate drops during the process, they will give you the lower rate. Tell them how displeased you have been with their service. You never know, they just might cut you a break. I do all the time.

Best of luck!