Home Buying Strategies That Work
Hi People. This Part 4 in the series of Home Buying Strategies That Work I interviewed my friend Stephen Moye at Crestline Funding to explain what it means to "lock your rate" and when the best time to do it is. This is what he said.
So you have found your dream home, (Because you read the Home Buying Strategies That Work), you have been pre-approved for a loan, your offer has been accepted, you have a close of escrow date, and you are feeling good...but what about interest rates aka "when should I lock my interest rate?"
In this segment of Home Buying Strategies That Work we'll first talk about what it means to lock a loan. In general, there are a couple stages at which a loan might be locked. The first is an agreement between you and your mortgage broker (unless they are a direct representative for the bank). This lock is usually as good as the broker's word and must be disclosed as such.
Unless you have an actual "Lock Confirmation" generated by the lender who will be funding your loan, you do not have a guaranteed access to that particular rate. Furthermore, in many cases, loans can be locked with lenders even if they are not actually approved.
In this manner, Jane Doe could request a rate lock with XYZ lender and the broker could lock that rate at XYZ. However, if XYZ denies the file for whatever reason, the borrowers file would have to go to a different lender, and it would be subject to whatever the current pricing is at the new lender.
When a loan officer (LO) actually locks a loan, its a bigger deal than you might think. The LO has to fill out a form, online, or verbally with a lender's lock department, and provide several pieces of information. The lender, at that point, is actually accounting for the loan being funded at that interest rate in their "future business." If the LO were to just "safety lock" (lock and then do the deal elsewhere if rates get better), it can seriously damage an LO's relationships with their wholesalers.
Because of this, the lock process should be taken seriously by all parties involved. Ask your LO to educate you on the market forces that are affecting mortgage rates right now. Then you can decide together when it is time to lock.
Due to the length of this article and because this is the 1st Sunday of the NFL season, we are making this a 2 part series within the Home Buying Strategies That Work series. Part 2 should be up early this week.
Let me, or Stephen/ 619-895-8128, know if you need any help.