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We put an offer on a house in October. Since we were going to have to live in our camper until we closed, the sellers offered to let us rent the house until then. We didn't really want to rent but thought it would only be a month or two. Turns out the owner did not have clear title so starting in December he has let us live in the house rent free. He hired a lawyer to get the title straightened out but the paperwork is now sitting on a judge's desk waiting to be signed and apparently LOTS of paperwork is backlogged so we have no idea when it'll get signed and filed. Our rate lock is now expiring and the bank wants to charge $750 to extend it 30 days on a $150,000 loan. This seems really high. Turns out the rates haven't changed so I told the bank no but loan officer told me that it would cost $750 in origination fees anyway so I might as well do the extension. Is it normal to have to get a new loan when your rate lock runs out? I thought you we would just keep our current rate for good or bad but she implied that we have to start over with new loan.
Also, the sellers refuse to help with extension costs because we aren't paying rent. I find this frustrating because we never wanted to pay rent at all and would have simply moved and looked for a different home had we had to pay rent all this time. Am I being unrealistic in wanting the sellers to cover the rate lock extension costs?
We put an offer on a house in October. Since we were going to have to live in our camper until we closed, the sellers offered to let us rent the house until then. We didn't really want to rent but thought it would only be a month or two. Turns out the owner did not have clear title so starting in December he has let us live in the house rent free. He hired a lawyer to get the title straightened out but the paperwork is now sitting on a judge's desk waiting to be signed and apparently LOTS of paperwork is backlogged so we have no idea when it'll get signed and filed. Our rate lock is now expiring and the bank wants to charge $750 to extend it 30 days on a $150,000 loan. This seems really high. Turns out the rates haven't changed so I told the bank no but loan officer told me that it would cost $750 in origination fees anyway so I might as well do the extension. Is it normal to have to get a new loan when your rate lock runs out? I thought you we would just keep our current rate for good or bad but she implied that we have to start over with new loan.
Also, the sellers refuse to help with extension costs because we aren't paying rent. I find this frustrating because we never wanted to pay rent at all and would have simply moved and looked for a different home had we had to pay rent all this time. Am I being unrealistic in wanting the sellers to cover the rate lock extension costs?
Thanks!
Yes, you're being unrealistic. What would four rent/house payments total? You got your $750 and some change already.
When you lock, that bank makes a commitment to deliver your loan. They have "mandatory delivery" or "best efforts" delivery. Most lenders mix it up, but the mandatory delivery is what keeps pricing down. The delivery method may not even be known by the loan officer or can be nonexistent with a portfolio lender. But one thing is certain - the pricing penalties exist when a locked loan cannot close in time.
Generally, if an extra 30 days is needed, it would cost you 1/4 point if known when locking. But when it's an extension, it's around 1/2 point. At this point you have two options, agree to the $750 or apply elsewhere. They don't want the $750 now do they? You also need to be prepared it may not close within the 30 day extension, and then the extensions get costly. You could apply elsewhere and float to hedge your bet, but let me give it to you straight. No one is going to be fighting to get your loan. A "maybe we will close with you" 150K transaction is not a loan loan officers will be fighting over.
Unless a VA or FHA loan, the 2nd lender will insist on an appraisal to continue with your loan ($450), so now at 30 days you are at $300 difference. I agree with the prior poster, what is the fair market rent of the property? Even if you have to double the extension fees, it still a decent deal. But if you go beyond that, you need to regroup for more than just the loan. Find out when your credit docs expire.
Another thought - has the appraisal been done? Did the appraiser have the addendum regarding rent free occupancy? Appraisers are to note items of value when doing the report and six months rent free is something of value and could be considered a concession, resulting in a dollar for dollar reduction on the maximum loan. A second lender could view the transaction totally different today. When does your appraisal expire? That is another question you need to ask.
I recommend you suck it up, asking the seller to pay any extensions are a bit much. Rarely does free housing come your way without credit repercussions.
The current interest rate expires May 8th. Appraisal was done and they knew about rent free situation but did not modify for it. (They also said the house had central heat but it doesn't. When I let them know, they weren't worried about it)
I think I'm just worried about the fact we don't know when this will close and I'm envisioning having to shell out $750 every 30 days. We have an RV and a place to park it so we had a rent free place to stay already so I don't look at the free rent as a bonus but I can understand that it would be unrealistic not to. The Realtor and the lender both suggested I ask for the extension fees. The realtor thinks the seller is too nice and has therefore not been deligent. Even after he learned about title problems he didn't follow up with lawyer for almost 2 months only to discover the lawyer didn't realize there was a contract on the house so he hadn't started working on it.
Sounds like you should get out of the contract, altogether.
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