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Old 10-25-2008, 10:35 PM
 
546 posts, read 2,031,505 times
Reputation: 158

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Ok, I’m kind of confused myself, so my question might sound confusing here, I’m trying my best to address my question.

I’ve submitted an offer to a short sale property and from what my realtor and the seller realtor said, it could take a week to 2 months to get an acceptance respond from the bank for this particular case. The bank has approved the offer price orally (we offered the full asking price), but due to all the short sale property being sold in our area, it could take a long time to get the offer approved ‘officially’. My question is about the mortgage I rate and who’s responsible for the lost I’ll have IF the I rate goes up? I see at times the I rate has been low these days, but I can’t lock it since my offer hasn’t been accepted yet, what if by the time the bank accepted the offer, the I rate keeps going up? Who’s responsible for this or is this something I just have to live with just like purchasing any other regular for sale properties? I know that some of you had some input that the I rate will drop or I will have more than one chance to lock the rate before closing…..but should I have written on the offer contract something like if the I rate goes up over a percentage I don't like, then I would have the right to withdraw from the purchase agreement? Actually, the offer contract is no longer valid as of now, since they haven’t accepted the offer by the past acceptance deadline…
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Old 10-26-2008, 07:51 PM
 
Location: MID ATLANTIC
8,211 posts, read 20,409,418 times
Reputation: 9477
Who is telling you cannot lock? You can and if your lender says no, go find another lender. If you have a verbal acceptance, you most likely will not have any issues with receiving the ratified contract. When you lock with a lender, you are locking in the rate for you (w/ your social security number) AND a specific property. When you lock in, you lock for a specific period of time. Give yourself plenty of time on the lock. If problems are encountered, a 2 week delay is not unheard of.

When you lock, tell the lender your situation and that you do not want an appraisal ordered until you have the contract signed. If the lender charges an application fee, move on to the next lender, there are many that won't charge. Don't pay for an appraisal fee until you receive your contract. If for any reason your contract is not signed the way you had understood, the lock is cancelled. Typically, lenders do not like to lock w/out the ratified contract, but this is an extenuating circumstance and there is no reason you should be at the mercy of the market. Which brings us to.......

The lock and interest rate is 100% your responsibility. If you lose out on a rate because you don't have the contract back, the seller is not going to do anything. Now, if for some reason the seller can't deliver the property at the closing date and you are ready and able, and your lender is ready and able, some of the seller's will pay for the extension of your lock - but not all. That is why I stress you lock for as long as you can.

A 30 day lock has lower closing costs than a 45 day lock and a 45 day lock has lower closing costs than a 60 day lock. In a foreclosure, I recommend your lock is at least 1 week beyond your closing date in the contract.

And finally, the market is highly volatile right now. Nine out of ten lenders will say lock and not play around. It's human nature to want the very best, so ask your lender if they will renegotiate your lock if rates drop dramatically, and if so, how is the renegotiation calculated. Some lenders have set formulas, some lenders take each case individually. They usually won't bring you all the way to market, but most will meet you halfway.

Do yourself a favor and get that puppy locked where it doesn't cost you any money.
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Old 10-27-2008, 03:39 AM
 
Location: Plano, Texas
1,675 posts, read 6,654,494 times
Reputation: 694
good advice from smart money.
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