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We are first time home buyers and just received our commitment letter from lender on our new house. We are very far along in the process and are essentially now waiting to lock in a rate so they can draft our settlement agreement. We are due to close at the end of December. We havent locked in a rate yet... our lender is saying he is trying to see which program will offer the most competitive rate for us later this week.
We believe him, but arent we already at his mercy? He could really screw us if he wanted to. Our GFE came back at a 5% rate and we are okay with it (given our down payment amount, credit score, overall sale price, income, 30 year fixed etc), but the commitment letter does indicate its a floating rate since it's not locked.
Since we are so close to closing, are we being reckless by not locking in a rate now? The rates have barely moved in the past week. But if it increases closer to our close date, we may be stuck.
Yes, you need to lock. The underwriters can't move forward with your loan without knowing what to use for your DTI (debt to income ratios). You're holding everything up, and next week is a short week.
Two personal observations:
1. 5% sounds a bit high to me, whatever your credit rating and loan to value is.
2. "trying to figure out which loan program is offering the most competitive rate" scares me. Actually, no, it sounds like BS. This part should have been figured out when you applied and your loan officer should have ran different scenarios and pricing for you. The only choice you should make at this point is which interest rate to lock in.
I would lock, just because Christmas is close and rates move up when people shop shop shop. Also, like Wmsn4Life said, a small jump would not affect your payment by much, and the odds are we're not lucky enough to see rates drop significantly.
But you holding up the underwriter is incorrect - you would get a conditional funding approval. Generally, 24h before the closing docs can be signed, your rate has to be locked in, and the HUD-1 issued for your review.
We are first time home buyers and just received our commitment letter from lender on our new house. We are very far along in the process and are essentially now waiting to lock in a rate so they can draft our settlement agreement. We are due to close at the end of December. We havent locked in a rate yet... our lender is saying he is trying to see which program will offer the most competitive rate for us later this week.
We believe him, but arent we already at his mercy? He could really screw us if he wanted to. Our GFE came back at a 5% rate and we are okay with it (given our down payment amount, credit score, overall sale price, income, 30 year fixed etc), but the commitment letter does indicate its a floating rate since it's not locked.
Since we are so close to closing, are we being reckless by not locking in a rate now? The rates have barely moved in the past week. But if it increases closer to our close date, we may be stuck.
Or is this typical for buyers?
Advice?
The only typical thing for buyers is over-thinking the rate, and not thinking about anything else.
Lock the rate, and focus on the rest of your financial profile.
Two personal observations:
1. 5% sounds a bit high to me, whatever your credit rating and loan to value is.
2. "trying to figure out which loan program is offering the most competitive rate" scares me. Actually, no, it sounds like BS. This part should have been figured out when you applied and your loan officer should have ran different scenarios and pricing for you. The only choice you should make at this point is which interest rate to lock in.
I would lock, just because Christmas is close and rates move up when people shop shop shop. Also, like Wmsn4Life said, a small jump would not affect your payment by much, and the odds are we're not lucky enough to see rates drop significantly.
But you holding up the underwriter is incorrect - you would get a conditional funding approval. Generally, 24h before the closing docs can be signed, your rate has to be locked in, and the HUD-1 issued for your review.
I totally disagree and would never say anything to have a buyer second guess themselves without knowing the full picture. It sounds like the LO has a DU/LP accept and each day is pricing accordingly, switching between the two guidelines. It's like the game, Telephone.....where you whisper one thing, but another thing entirely is heard. This very easily could have been an LO explaining they were flipping the quotes between Freddie and Fannie on any given day and that is what they heard.
OP, go ahead and lock. There are so many federal and state regulations in place, requirements on pricing discrepancies, big brother looking over every single lender's shoulder, I don't think it's possible for you to be totally screwed. Deep breath, move forward. If you really want an opinion on the specifics of your lock, we need the complete picture......and it sounds like you know why you are priced the way you are already, but we would be happy to chime in once we have all the facts.
I totally disagree and would never say anything to have a buyer second guess themselves without knowing the full picture. It sounds like the LO has a DU/LP accept and each day is pricing accordingly, switching between the two guidelines. It's like the game, Telephone.....where you whisper one thing, but another thing entirely is heard. This very easily could have been an LO explaining they were flipping the quotes between Freddie and Fannie on any given day and that is what they heard.
OP, go ahead and lock. There are so many federal and state regulations in place, requirements on pricing discrepancies, big brother looking over every single lender's shoulder, I don't think it's possible for you to be totally screwed. Deep breath, move forward. If you really want an opinion on the specifics of your lock, we need the complete picture......and it sounds like you know why you are priced the way you are already, but we would be happy to chime in once we have all the facts.
If you called in to lock today, I'm pretty sure that you'll get below the 5%. Your loan person it probably trying to save you money on a shorter lock period. Call today, if you are happy with the rate and payment , just lock it and be done with it.
If you called in to lock today, I'm pretty sure that you'll get below the 5%. Your loan person it probably trying to save you money on a shorter lock period. Call today, if you are happy with the rate and payment , just lock it and be done with it.
The reason why I am so emphatic knowing the details, yesterday I lost one, 620 credit score, 5% down, no MI in payment, he got a 5% rate, I couldn't come close. We need all of the specifics to give an opinion. Credit unions are offering these MI payment-free programs and they are competing hard. (For all I know it could be the same customer, lol).
Credit unions are offering these MI payment-free programs and they are competing hard.
Yup, that's why when MI topics come up, I use general terms and don't say things like "All lenders" and "have pmi for the life of the loan"
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