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