We've all read enough by now about how you need a 720 credit score and 20% down to qualify for what people commonly refer to as "the going rate" or "the rate I saw on Bankrate" for a 30-year fixed mortgage. I've seen a few different approaches to the way people fill in the blanks for the "interest rate not to exceed X% over Y years" portion of the mortgage contingency clause; now that a pre-approval letter with a statement that the borrower's application received an "Approve/Eligible" underwriting recommendation no longer results in "the going rate," how do you approach the mortgage contingency?
A couple of things to get the discussion going: What does a buyer's "interest rate tolerance" tell you about his/her/their motivation level? When representing a seller, has the interest rate ceiling stated in an offer caused you to question a buyer's bona fides? When representing a buyer, what kind of "expectation setting" discussions do you have with your client regarding what figure to set as the interest rate ceiling? Do you ever consult with "your trusted mortgage partner" about the mortgage contingency clause? Have the changes in the mortgage market caused you to change your approach to the mortgage contingency clause?
Share some tips, advice and insight with your colleagues and let us know what you think.
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