Quote:
Originally Posted by darkblue
How can the lender change the rate once its locked ( not float down).My lender did not agree for that and agent also told nobody does that.
If rate can be changed even after lockin then what is the point of locking in
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The "lock-in" option was created during the boom, inflationary period when people needed some guarantee of rate out of fear that a higher rate might jeopardize their ability to make the mortgage payment. However, along with this "guarantee" came a fee, usually about $250 or 1/4 point paid by the borrower. This represented more profit for the lender and the buyer was willing to pay a small fee for peace of mind.
In the current environment of a Fed trend to lower rates, any lender who is pushing a lock-in clause is abusing the buyer. They know better. In fact this 3/4 point inter-meeting cut will probably be followed by another 1/4 to 1/2 point cut at the next Fed meeting. Lenders know that anyone they can get to close on a rate now will represent more profit for them in a few weeks. As always the only solution is market competition. Unless you are very close to closing they need to know you will walk to another lender.
If they are unwilling to negotiate with you, I wouldn't do business with them in the first place.
As with all successful business transactions, the "lock-in" should be mutually beneficial to both parties. If the lender is trying to use it as a weapon to unfairly leverage the buyer, it is up to the buyer to assertively advocate for himself.
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