You are here:
Buying or Selling a Home/Mortgage rates
Advertisement
Question
Before signing the lock in agreement, are you committed to that lock in rate or can you wait or change to another rate?
Hey TOM--
Signing a Lock-In Agreement is like signing a Contract-- the Lender is committed to giving you the Note Rate that he/she is "locking in" for you & can't raise it. On the other hand,you are committing to accepting that Note Rate even if market rates drop before your Closing!
Sometimes only a verbal authorization for a Loan Officer to lock at a certain rate is used, rather than a written/signed agreement. You'd have to ask an Attorney just how "binding" such a verbal contract would be!
If you haven't made a written/signed OR verbal agreement to "LOCK IN" @ a specific interest rate, you're "FLOATING!" When "floating,"
you are at the mercy of the Daily Interest Rates. Will they go up, will they go down, will they remain the same?
Right now we're looking at the LOWEST interest rates in history--less than 5%. And the vast number of foreclosures has driven Home prices DOWN. So...money is cheap, homes are reasonably priced TODAY.
If I had a loan processing at a Note Rate of less than 5%, to purchase a Home that's selling for "a whole lot less" than it would have a year ago, I'd lock NOW! I don't THINK the Loan rates & Home prices are going to get much lower or prices are going to get much better.THIS,HOWEVER, IS JUST MY O-P-I-N-I-O-N !
If the Loan I have processing is for an interest rate higher than the prevailing "Four-Point-Something" (IE 4.99% or whatever)and I had actually locked in at a "Six-Point-Something" (IE 6.75% or whatever),and my current Lender was going to hold me to the higher rate, I'D FIND ANOTHER LENDER who will do my Loan at the prevailing market rate! Although the "LOCK-IN Agreement" one has with his Lender is a Contract, it's one that can only be valid for the CLOSING of a specific loan--and if one doesn't close, the "Lock-In" Agreement isn't "worth the paper it's written on UNLESS the Lender took a CASH, non-refundable "Lock Fee" from the Borrower.
People who are "Risk Takers" usually float for a while, watching the interest rate movement every day; Others who aren't "Gamblers"
lock in right away--especially if the interest rate creates a "comfortable" monthly payment schedule. I hope this gives you enough of an "education" on "LOCKS" & "FLOATS" to allow you to make the best choice. YOU have to make the decision on LOCK versus FLOAT...
Good luck and enjoy your new Home!
--JIM
Related Articles
Answers by Expert:
- Dick Dennis
- Jessica Bryan
- liznarr
- Hans Weber, Licensed Broker Associate
- Sue Bernstein
- Karyn Foley
- Dottie Worthington
- Jim Root
- Russel Ray
- Connie Wildasinn-Broker,GRI,RealtorŪ
- Todd C. Menard
- Diann Tonnesen
- John Hendricks
- Jay Denit
- Matt Heisler
- Lisa Webber
- John
- Laurie Stephenson
- Marvin G. Bobbitt, III
- Nori J. Muster
- Sharon Huneycutt, Realtor, Associate Broker, GRI, e-PRO
- CJ Brasiel
- Jeff Kessler
- Kathryn Hisert
- Emily
- Ted Lewis
- Kerrin Kostelic, FL Broker Associate, GRI, AHWD
- Tim Norris
Jim Root
Expertise
How to select the right Real Estate Salesperson & Loan Officer--ones who will serve your best interests! House-hunting tips & suggestions on selection of the home best for your family needs. Introduction to the Home Buying Process & all the "Players" involved.What is of utmost important to the Homebuyer? Real Estate Contracts & Negotiations, Appraisal needs, Title Co. involvement, Home Inspection issues& the Closing/Escrow systems, etc. Whatever your question, the answer will follow, whether from personal knowledge or research! Gale, shown here with me, has been a Real Estate Office Administrator, licensed Realtor & has served as my Research Assistant over the years!
Experience
Over 30 years as a "Real Estate Professional." including Real Estate Marketing & Sales, Appraisal work, Mortgage Banking & as a Realty Officer with U.S Dept. of HUD's FHA Homeownership Division in Alaska, Washington & Idaho! Some experience in Montana, California, Utah & Nevada markets!Knowledge of National Markets by continuous Research!
Organizations
Former member of Nat'l Ass'n of Realtors (NAR) & Mortgage Bankers Ass'n of America (MBAA). Currently with National Association of Review Appraisers & Mortgage Underwriters (NARA/MU).
Publications
Published in various local, state, regional & national Real Estate-related magazines & newsletters!Co-author of various Govt. publications on Homeownership, Appraisals & Mortgages while with HUD/FHA.
Education/Credentials
Associate Degree in Real Estate Studies plus:
Numerous Real Estate-related Courses conducted by the U. S. Government & Private Industry over the past 30 years.
Bachelors Degree in Mass Communications,
Masters Degree in Education/Teaching
Awards and Honors
Professional Designations: Certified Residential Originator (CRO) from MBAA, Registered Mortgage Underwiter (RMU) & Certified Review Appraiser (CRA) from NARA/MU. Outstanding Peformance Awards for 10 of the 12 years with HUD/FHA & numerous Sales/Listing Awards while a licensed Real Estate Agent.
Past/Present Clients
No longer selling/listing Real Estate, nor Appraising properties, nor working in the Mortgage business, this "Real Estate Pro" serves as Director of a Company that provides Professional Development Seminars & Workshops to the "Real Estate Industry" and provides free (as needed) & fee-paid (on a sliding scale) consulting & inspection services to members of the general public.Your questions will be answered without "salesmanship" & with your best interests in mind!
©2012 About.com, a part of The New York Times Company. All rights reserved.