| This is the best way to avoid one of the most | | | | process. For this reason, it is important to search |
| famous scams the mortgage industry plays on | | | | for a lender that will lock down the interest rate |
| the public. When you apply for the loan at XYZ | | | | through all phases of the mortgage application |
| Mortgage Company you get quoted a great rate | | | | process from application to approval. |
| say 4%. No other mortgage company can beat | | | | Lock commitments serve a myriad of benefits. |
| this rate so you do the loan with XYZ. But at | | | | For starters, loan applications can take a very |
| closing the rate on the paperwork shows 6.9%! | | | | long time to be prepared. Lock in protection could |
| What happened? XYZ scammed you. And if you | | | | make or break your ability to pay for the |
| say no to the loan at closing you lose the house | | | | mortgage. Keep in mind that lock commitments |
| because the contract will probably expire. So | | | | could work against you in preventing you from |
| most people just take the loan at the much | | | | taking advantage of price drops (unless you get |
| higher than market rate. | | | | prior consent from the lender.) Analyze the |
| The way to avoid this is to get your mortgage | | | | market trends and mortgage interest rate activity |
| company to LOCK your rate, and to show you | | | | to make the best educated guess on whether |
| the confirmation of the rate lock. Each lender | | | | mortgage rates will go up or down. |
| sends either a fax or an email confirming a rate | | | | Remember, lock commitments are meant to be |
| lock. This then goes into the loan file. | | | | acted upon. If you don't settle for the interest |
| DEMAND to see this confirmation. It is the only | | | | rate specified during the lock in time frame, you |
| way to be sure that you will not get scammed at | | | | might lose the interest rate. All processing delays |
| the closing table. | | | | may negatively impact keeping the rate as well. |
| Real estate novices and enthusiasts alike are | | | | Delays might be caused by lenders waiting for |
| always savvy enough to shop around for lenders | | | | additional paperwork from you during the |
| providing the lowest mortgage interest rates. In | | | | application process. In addition, lenders might be at |
| addition, they may seek out more favorable | | | | fault for delays, especially when there is a high |
| terms and easier repayment periods. When | | | | demand for their loans when the market dictates |
| you've found a lender willing to provide you with | | | | falling interest rates. |
| the terms you need, it makes sense to apply | | | | Your lock commitment should also state all |
| through them. The question stands: will the | | | | approved terms, how long the promise is valid, |
| outlined terms be the one you follow? With rates | | | | and any conditions needed to follow through with |
| changing by the day, how do you ensure your | | | | the loan (i.e. a lender receiving an insurance policy |
| costs stay down with mortgage loans? A way to | | | | or a required credit score) Lock commitments are |
| calm the storm is by asking for a lock | | | | best served on paper. Verbal agreements are |
| commitment. | | | | very sketchy and hard to deal with in the |
| To start, a lock commitment is a promise made | | | | courtroom should a legal situation arise. Expect to |
| by the lender to keep a certain interest rate for a | | | | pay a small fee for a lock in, which can be made |
| period of time throughout the loan application | | | | either up front or upon settlement. If it's a flat |
| process. Remember, the interest rate upon | | | | fee or a percentage of the total mortgage total |
| application filing could be 6.9% while the interest | | | | varies according to lenders. Look to a lock |
| rate upon application processing could increase to | | | | commitment today to secure the favorable |
| 7.4%. Many times, the quote you apply for does | | | | mortgage rate for your home buying future. |
| not remain the same throughout the application | | | | |