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When Should The Buyer Of A Short Sale Lock In An Interest Rate?
The problem: An interest rate lock costs the buyer substantial non-refundable upfront money. The money will be lost if the house does not close on time. Yet, short sale timelines are long and unpredictable, to say the least.
What should all parties do in a short sale, as it relates to rate locks?
The listing agent should:  
Disclose in writing to the buyer, the buyer’s agent and the buyer’s loan officer that the short sale may take months and there is no guarantee of approval. Disclose in writing if the buyer locks in a rate it is at the buyer’s own monetary risk. Notify the buyer's agent ASAP when the short sale has been approved by the short sale lender. At that time there is a specific "close by" date and the buyer can plan their rate lock with more certainty. The buyer’s agent should:
Disclose in writing to the buyer and the buyer’s loan officer that the short sale may take months and there is no guarantee of approval. Disclose in writing if the buyer locks in a rate it is at the buyer’s own monetary risk. Notify the buyer and the buyer's loan officer ASAP when the short ... more

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