Rate lock?

[Backfire]

I locked a 30 yr fixed mortgage rate at 5.875% about 62 days ago, but had the loan in limbo while trying to sell my current house. They were clear about telling me the lock would expire in 45 days. Since their current rate is 5.750%, I called for a new lock. They want to charge me a $500 penalty...WTF?
I was forced to complete the purchase of the new house, but won't close till April, so I have time to make other arrangements.
Is there some hidden justification for their penalty, or are they just being sour-grapes a-holes?

[plaster dave]

So you will drop your intrest rant by .125 and you wont pay $ 500.00. If your buying a house that is $400,000.00 your payment @5.87 is $ 2364.87 Your going to pay $ 851,353.20 over 30 years and with 5.75 it is $ 2334.29 that will be payed over 30 years is $ 840,344.40 so you save $ 11,008.80 pay the $ 500.00 just my .02 BTW Congrats on the new house. :D

[Red Eye]

I'm in the lending business and that's not too bad to float down you rate. Most companies charge .5pt to do that, so consider yourself lucky.

[Backfire]

Did I forget to mention the part where the lock expired after 45 days? What makes me $500 less valuable than a new applicant? In my situation, it will take over 5 years to recover the $500 from the payment difference. It seems like they are challenging me to go away!

[NorCal Gameshow]

what's it cost to walk away?
what good was the 45 day lock if the house isn't going to be ready 'til april ?
how long is the new lock good for? if you go for a new loan you'll need at least a 60 day lock anyway
congrats on the new house :cool:

[plaster dave]

It's a savings of $ 30.58 a month it will take you 16 months to recover your $ 500.00 back. If you are not going to stay in you house for a long time then do an Intrest only it will save you a couple hundred a month. G L

[Ivan Dan]

I locked a 30 yr fixed mortgage rate at 5.875% about 62 days ago, but had the loan in limbo while trying to sell my current house. They were clear about telling me the lock would expire in 45 days. Since their current rate is 5.750%, I called for a new lock. They want to charge me a $500 penalty...WTF?
I was forced to complete the purchase of the new house, but won't close till April, so I have time to make other arrangements.
Is there some hidden justification for their penalty, or are they just being sour-grapes a-holes?
I would walk away from that....how is your credit? if you have stellar credit you should be able to get closer to 5.5% or even lower. My lender quoted one of my clients like 5 3/8% 30 year fixed rate on Tuesday. These clients had PERFECT credit too though. I would shop around and find someone else that could get you a more competitive rate.

[Mtg Pro]

Without knowing the amount of your loan, it really isn't fair to comment on the actual rate. I will tell you in general, rates have improved in the period that you were locked in at. I just don't understand why they don't lock you in with another investor at the better rate. Don't pay the penalty.

[Tequila-John]

Without knowing the amount of your loan, it really isn't fair to comment on the actual rate. I will tell you in general, rates have improved in the period that you were locked in at. I just don't understand why they don't lock you in with another investor at the better rate. Don't pay the penalty.
I too am in the business. MTG PRO is right. Alot goes into a loan, ask them to use another invester and get "TODAY'S" pricing it is much better now then it was 45 days ago. Good luck

[PHX ATC]

If you have spotless credit, you could politely explain that you deserve that lower rate. Act nice, explain how they're still making loads and piles of money off of you and it really would be a good faith gesture to waive the $500 fee. I'm sure, buried somewhere in the closing docs are some hidden fees that they will easily recover that $500. Just mention in passing that you know there's some bullshit (oops, I mean worthless) fees stuck in there and they will more than make $500 off of you in the long run.
Offer to stay with the loan for at least 16 months, like the previous fellas figured, or they can charge you $500 for refinancing with somebody else. If they don't budge, tell them you'll refinance with somebody else and they'll lose the entire loan. Of course, that probably will cost you more than $500, but you don't have to mention that.
Really, give it the good hard sell on how it sure would be a good faith gesture on their part to waive the $500, if they don't, it's not that big of a deal.
The better your credit, the more power you have.

[Sandbar Mike]

I would walk away from that....how is your credit? if you have stellar credit you should be able to get closer to 5.5% or even lower. My lender quoted one of my clients like 5 3/8% 30 year fixed rate on Tuesday. These clients had PERFECT credit too though. I would shop around and find someone else that could get you a more competitive rate.
I'm with dan on this, If your credit is good, doesn't have to be great but good works, go with someone else. I just refi'd around 5K in closing and i got 5 1/4 on a 30yr fixed. There are better deals out there! If you want some info on my lender shoot me a PM.

[Sandbar Mike]

If you do happen to do a rate lock, make sure they include the rate lock fee's on your good faith estimate as a refund at closing. They'll do that in most cases.

[Backfire]

The loan is only for 100k, so it is a half-point penalty. The eight dollar difference in payment would take me over 5 years to recover the $500. My credit score is 780.
I have every dime of my money on deposit with the institution that is attempting to do this to me. They are trying to blame it on the folks that they plan to sell the loan to. I'm mad enough to withdraw all my deposits with them and move to another organization.
Philosophically, I like having my money on deposit with a credit union because their business model is simple- they loan money to people. I don't really wanna go elsewhere, but I can't allow myself to be abused!

[Lake Ape]

Seems like everyone is missing the point. His lock expired and the current rate is lower but the lender wants to charge him $500 to change to the lower rate even though his lock is expired. Why should he have to pay to go to the lower rate when his lock expired. His credit shouldn't matter in this case. Yes I know credit matters but no this scenereo. I used to own and run American Eagle Corp. we had a HUD/FED contract to investigate bad lenders and this came up a lot. I would just ask the LO point blank about the costs and walk if it isn't explained. There are many, many good lenders out there and fees are always negot.

[Todd969]

Who are you doing the loan thru? As of this morning a no point loan should run about 5.625%, but what do I know I only trade MBS. Unless there is some link between your Builder and the mortgage company I would look elsewhere.

[Parker Dreamin]

I am in the business as well. PM if you would like me to run some numbers for you. Congrats on the new house !!!!

[Roxysnow]

The loan is only for 100k, so it is a half-point penalty. The eight dollar difference in payment would take me over 5 years to recover the $500. My credit score is 780.
I have every dime of my money on deposit with the institution that is attempting to do this to me. They are trying to blame it on the folks that they plan to sell the loan to. I'm mad enough to withdraw all my deposits with them and move to another organization.
Philosophically, I like having my money on deposit with a credit union because their business model is simple- they loan money to people. I don't really wanna go elsewhere, but I can't allow myself to be abused!
Honestly, you're getting hosed on the rate unless it's a no cost loan. Typically loans under 100k would have an extra bump in rate through fnnie mae. But in your case, for a 100k loan at 0pts should get you 5.375-5.5% on a 30yr term with standard closing costs. Did you lock the rate w/ a rate lock fee or deposit? The average refi takes 25-45 days depending on state. California averages 20-30 days as long as there are no title issues, apprasial issues and etc...If your rate lock expired already, you should be able to float to the current rate but it sounds like the company you are dealing with requires another rate lock deposit of $500. And I am assuming you already paid for the appraisal? So if you leave you're out an appraisla fee too. Most companies either require their own appraiser or you'll have to have the name on the appraisal reassigned which will cost you another 100 bucks. If you have any questions PM me. :boxed:

[Luscious]

I WORK WITH SOMEONE WHO IS OFFERING STATED INCOME PROGRAMS RATES STARTING AS LOW AS 1% UP TO 970,000k WITH FICOS AS LOW AS 580!!! THESE ARE THE BEST LOAN TERMS I HAVE SEEN IN A WHILE. PM me so I can refer you if you are interested.

[Parker Dreamin]

1% is a neg am loan.

[Backfire]

I didn't agree to an "application fee", nor has an appraisal been done yet. I can walk without owing a dime! I don't know if the unused or replacement ratelock was something that this credit union would pay for. I will not agree to finish the process unless they extend a new lock for me till 10 days beyond closing.

[Parker Dreamin]

With your home completion in April I would walk away and work with somebody that is looking out for your best interest rather then their own. You have plenty of time to get a better loan. With most programs you can lock in your rate for 30 days with ou having to pay any points. They do offer 45 and 60 day locks but those do cost more (points)

[Jetboatguru]

BAckfire,
It is simple. Like previously stated above, have the broker move the loan to a different lender and do another lock (probably at better pricing today). If the broker chooses to not do that, then walk and call one of the many qualified people who helped you in here.

[Unforgiven]

BAckfire,
It is simple. Like previously stated above, have the broker move the loan to a different lender and do another lock (probably at better pricing today). If the broker chooses to not do that, then walk and call one of the many qualified people who helped you in here.
Tony, you good at loans as you are driving a boat??

[Restless22]

Tony, you good at loans as you are driving a boat??
rotflmao
:boxingguy

[Jetboatguru]

That is a loaded question Eddie. :)
I can help if you need it ;)

[Unforgiven]

That is a loaded question Eddie. :)
I can help if you need it ;)
sorry Tony...I'll unload next time....

[OC-PARTYCAT]

I WORK WITH SOMEONE WHO IS OFFERING STATED INCOME PROGRAMS RATES STARTING AS LOW AS 1% UP TO 970,000k WITH FICOS AS LOW AS 580!!! THESE ARE THE BEST LOAN TERMS I HAVE SEEN IN A WHILE. PM me so I can refer you if you are interested.
Holy shit...wish I called you a couple months ago..
Shouldnt he just hang out and wait since rates are on the down swing?

[superdave013]

Tony, you good at loans as you are driving a boat??
I would say so. He took care of my re-fi and it went as smooth as butta.
Don, dump those guys and go with Tony. He'll fix you right up and he's even a v driver to boot!

[Excessive Force]

Is there a website that shows how all these different types of loans work?

[Kwicherbichen]

There are websites for most of the standard type loans 30's & 15's etc.. but not for some of the new product out there interests only ARM's and pic a pay.
In this situation I might have walked on this company or at least shopped someone else to see where I stood. If you had lock a lower rate and it expired then went up they wouldn't have given you the lower rate nor would they have charged you $500. They would have just explained that your rate went up after the lock expired and that's what you have to pay now.

[totenhosen]

Hey intrest rate Guru's....I just got a 5.625 with one point 30 year fixed loan. I have very good credit and got the loan pre-approved. The charged me $100. to do the pre-approval and provided me a letter to provide/show the house seller. I paid the point because I will have the house for quite a long time and wanted the lower rate. No points would have been about 5.875 if I remember correctly.
The loan is for about $325K and I was wondering if I did alright with the % they are giving me. It is thru WF and I do quite a lot of business thru them...business, personal, other mortgages, etc. Not looking to switch but since I saw this thread thought I would see what you guys had to say.
What do you think? Good, bad, about right?
It's okay nothing special. I could have gotten it for you w/o charging you the point. If you are still interested let me know.
(If you have three or more other bank products through Wells Fargo you are eligible for a $250.00 rebate on closing costs.)

[TheLurker]

From MSN Money
6 mortgage rip-offs to avoid
Mortgage lenders and brokers have plenty of fine print in which to hide otherwise blatant rip-offs. Here's how to spot six common tricks.
By Liz Pulliam Weston
Given how easy it is to get skinned on a mortgage deal, it's amazing anyone ever buys a home.
But buy we do -- and then refinance, and refinance again. Our ignorance of how the mortgage process works and the many ways mortgage pros rig the system in their favor lead many of us to pay far more than we should.
However, the more you know about common mortgage rip-offs, the better armed you'll be to negotiate a good deal. Here are some of the most common ways that mortgage lenders and brokers dupe their customers, and what you can do to avoid being taken:
I'm not going to honor your rate lock.
When interest rates are volatile (and when are they not?), it can be smart to "lock in" a rate so you don't face a higher payment if rates rise during the time it takes to process your loan paperwork. A lock is a commitment by a lender to provide a specific rate for a specific time, often in exchange for a fee.
A lending officer or broker may imply, or even state, that you've got a lock. But a verbal promise is worthless.
"Get it in writing from the lender," advised mortgage expert Diane St. James, a consultant and underwriter who runs ABC Mortgage Consulting. "If you end up going to an attorney, you'll want to have something on paper."
Even if you get a written commitment, though, you're not out of the woods. Find a loan that's
right for you at the
Loan Center
You know how the cops on "Law & Order" sometimes "lose" suspects' paperwork to keep them jailed a little bit longer? Unethical lenders do something similar if they don't want to honor their commitments. It's called "running out the lock," or delaying the loan's closing until the lock expires and you're faced with accepting a higher rate.
"If rates go up, they run out the lock," explained Michael Moskowitz, president of Equity Now, a New York-based mortgage lender. "If rates fall, they honor the lock."
How can you protect yourself? Some suggestions:
Get referrals. Find out which companies your friends used and whether they were happy with the service they got. Picking a broker or lender at random, using phone books or advertisements alone is just asking for trouble.
Check them out. Look up their complaint records with the Better Business Bureau and your state regulators. (Brokers and lenders are typically regulated by state departments of real estate.)
Get your paperwork in on time. Don't give them excuses to stall. For more details on what you'll need to have ready, see "7 secrets to refinancing on the fast track."
Raise Cain. If it looks like your lock will expire before your loan is funded, demand to speak to a supervisor and mention you're going to complain to state regulators if your lock isn't honored. You also might suggest your attorney is going to get involved. Kicking up a real fuss may be enough to convince them to stop playing games, at least with you, Moskowitz said. "Why pick on you," Moskowitz said, "when there are a lot of other people to pick on?"
I'm getting a bonus for putting you in a more-expensive loan.
This little scheme can work a lot of different ways, but here's one of the more common ways it plays out:
You call a broker and are quoted a rate of 6.5% with no points on a 30-year fixed rate mortgage. By the time you're ready to lock in, the lender's rate has dropped to 6.25%. But the broker doesn't tell you that, and instead locks you in at 6.5%. As a 'thank you' for selling the more-expensive loan, the broker gets a payment of a couple thousand dollars from the lender, and you get stuck with higher payments.
Amazingly, this is usually legal as long as it's disclosed in your paperwork -- but you typically don't get the notice until your loan is about to close, and the disclosure is usually buried deep in the legalese.
Lender payments to brokers for selling higher-cost loans are known as "yield spread premiums," and they're incredibly widespread. One Harvard University professor who has studied the issue, Howell E. Jackson, estimated that these premiums affect 85% to 90% of borrowers and average $1,850.
Brokers insist this is a legitimate way to do business and cover their costs. But consumer advocates say, at the very least, that they should be better disclosed.
The best way to protect yourself from the most egregious overpayments is to do lots of footwork:
Know what a competitive offer looks like. The loan savings calculator at MyFico.com can give you a rough idea of what rates to expect, given your credit scores, while quotes from online sites like ELoan and LendingTree can give you detailed information on the going rates and fees.
Get all your quotes on the same day. Rates change constantly, and a quote that's good today probably won't be comparable tomorrow. Also, rate-shopping over an extended period can hurt your credit score.
Ask lots of questions. If you're working with a broker, the National Consumer Law Center recommends you demand to know how much the broker is making from the lender as well as from any fees you might be paying. It's best to get this information upfront and in writing. Avoid a broker who's double-dipping: getting a fat premium from the lender as well as fees from you.
You'll never get the low rate I advertise.
If you've done your footwork, you should be able to tell when a rate is too good to be true. If a lender is offering a rate considerably below the competition, there's going to be a catch like high hidden fees, a teaser rate that quickly expires or super-high credit standards that few borrowers will meet.
Again, the best way to find a square-shooter -- and a good deal -- is with referrals and background checks. Also, make sure you're upfront about your financial situation. Most lenders assume your deal will be fairly straightforward and that you meet the following criteria:
You have good credit.
You have stable employment.
You have a decent-sized down payment and enough cash to cover closing costs.
You can document your income and assets.
You're a U.S. citizen or permanent resident.
You're buying a home you plan to live in (rather than rent out).
If any of these aren't true, you should let your lender or broker know in advance so you can get more accurate quotes.
You're going to end up owing more, not less, on your loan in a few years.
Most loans require you to pay down your equity over time, so that your balance shrinks a bit each year.
There are a few exceptions. Interest-only loans typically don't require principal payments for the first five to 10 years (for more details, see "Could you handle an interest-only loan?"). And some adjustable-rate mortgages allow what's called "negative amortization," where your balance can actually grow.
This is a feature of the newly popular "flexible payment" or "option" ARMs, which typically give you four choices of how much to pay each month.
One of the choices is usually a low minimum payment that may not cover all the interest that's accumulating on the loan. That unpaid interest is instead tacked on to your principal, so that your balance is getting bigger over time. This process is called negative amortization.
"You borrow $200,000," St. James said, "and five years later you owe $210,000."
There are usually limits to how much negative amortization you're allowed, however. Most loans that have this feature will automatically "reset" if your balance climbs to 110% to 125% of what you originally borrowed. That means your payments will suddenly spike, so that you're required to start paying down your principal. Borrowers who aren't prepared for this jump can wind up losing their homes.
Any time you get an adjustable mortgage, you should ask the lender for a schedule that shows how high your payments can go and how much you'll owe after five, 10 and 15 years. If you have more than one repayment option, ask for a schedule for each one. You want to see the worst-case scenarios, not the best. And don't listen to arguments that rates "won't" or "can't" hit their caps. Nobody can predict the future of interest rates.
I'm misleading you about your rate cap.
Here's another problem with flexible-payment ARMs: People are getting confused about their caps.
The typical ARM allows your interest rate to rise no more than 2 percentage points a year, or 6 percentage points over the life of the loan. A 1-year ARM that starts at 5.5%, for example, could jump to 7.5% in 12 months or a maximum of 11.5% by the fourth year.
But many people with flexible-payment ARMS think they have lifetime interest-rate caps of 7.5%, Moskowitz said -- either because they didn't understand what they were being sold, or they were deliberately misled.
What they actually have is a 7.5% payment cap. That means if their monthly payment is $1,000, it can rise to $1,075 in the second year, $1,156 the third year and so on.
"Their actual interest-rate cap might be something like 12%," St. James said. If the borrower's interest rate is rising more rapidly than the payments, the unpaid interest is tacked on to the principal amount -- creating the negative amortization discussed above.
Again, the best way to avoid surprises is to have the lender give you a schedule of payments that shows the worst-case scenarios. Then you can make an informed decision about whether this is the right loan for you.
Your 'no-cost' loan is going to cost you a bundle.
We're back to the adage, "If it sounds too good to be true, it probably is."
Every loan has costs: for appraisals, title insurance, underwriting, etc. The lender may be tacking the fees on to the loan principal, or charging you a higher interest rate than you would have paid had you covered the costs yourself.
In rare instances, St. James has seen lenders offer truly no-cost refinancings, where the borrower got a competitive rate and no fees were tacked onto the loan. But the deals were so-called "streamlined" refinancings for existing customers the lender didn't want to lose. If you walk in off the street, you're going to pay for the loan one way or another.
You might very well choose to pay a higher rate for a "no-cost" loan if you plan to be out of the home in a couple of years. But if you plan to stay longer, it's often a better idea to pay the costs out of pocket.
Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.

[totenhosen]

Thanks for the feedback. I am already in the process of the WF loan...I assume you have to ask for the rebate becuse they have not offered it to me :(. I will be asking them about that tomorrow. He made it seem like he was giving me a very good deal on the loan. I think that it was probably pretty good for WF but if I went with a smaller leander I would have gotten a better deal.
Thanks again
Actually it was offered to me w/o me asking. (Relationship pricing). In addition if you do automatic payment out of a Wells account they deduct 1/4% off the interest rate.

[Outnumbered]

I locked a 30 yr fixed mortgage rate at 5.875% about 62 days ago, but had the loan in limbo while trying to sell my current house. They were clear about telling me the lock would expire in 45 days. Since their current rate is 5.750%, I called for a new lock. They want to charge me a $500 penalty...WTF?
I was forced to complete the purchase of the new house, but won't close till April, so I have time to make other arrangements.
Is there some hidden justification for their penalty, or are they just being sour-grapes a-holes?
A few things to consider: 1) You will have to pay for a new appraisal and credit check on the new loan if you bail. 2) If you are buying a new home and using the builder's mortgage company you will loose your financing incentive. 3) Your credit score will get hit again for another set of inquiries (sp). 4) You have to put together a whole new application and documentation package--PITA. But if you can beat the rate with someone else by a big enough margin then go for it.

[bigq]

Hey intrest rate Guru's....I just got a 5.625 with one point 30 year fixed loan. I have very good credit and got the loan pre-approved. The charged me $100. to do the pre-approval and provided me a letter to provide/show the house seller. I paid the point because I will have the house for quite a long time and wanted the lower rate. No points would have been about 5.875 if I remember correctly.
The loan is for about $325K and I was wondering if I did alright with the % they are giving me. It is thru WF and I do quite a lot of business thru them...business, personal, other mortgages, etc. Not looking to switch but since I saw this thread thought I would see what you guys had to say.
What do you think? Good, bad, about right?
Is it for the 2nd house at the river? if so I think the rates are higher for a 2nd home.

[totenhosen]

Is it for the 2nd house at the river? if so I think the rates are higher for a 2nd home.
Depends which lender. I don't think Wells has a hit for a 2nd home. It's when you get into investment property that they hit you for a higher rate.
What I did with Wells is told them the first palce I bought out of state was a 2nd home so I got the best rate available. Next house I bought out of state in AZ I told them the same thing. When they asked how can that be when the first loan I did with them was for a 2nd home. So I told them I liked it so much in AZ that I bought a larger hosue and the first house I bought is now a rental.

[locogringo]

Is there a website that shows how all these different types of loans work?
Yes, go to my site and it'll explain all the different types. (don't worry, I won't try to sell you on anything; rather like educating people). :smile:
different loan types (http://www.brucknermortgageteam.com)