I think many borrowers are under the impression that a “rate lock” is just a verbal agreement that the loan officer and customer make and after saying it out loud and clicking your heels twice, the rate is locked.
In reality, there is a process involved with locking a rate that involves pulling credit, running the application for an approval, registering a loan number, and then running the file through a “pricing engine” to get and secure the actual rate lock based on market conditions.
Today, I had a customer that had been non-committal for the last couple of days shopping for the best rate.
When she finally made the decision to move forward, the bond market had made a drastic re-tracement that, even though I jumped on it immediately, I was unable to secure the rate lock before the system was frozen due to volatility. When it came live again, her rate was .25% higher, and she was less than happy. In her situation, we will just float the loan and wait for the market to correct itself, but it is frustrating for all involved.
The moral of the story is;
if you find the loan officer that you trust and want to work with, get the application done, get your paperwork together so that your loan officer can pull the trigger in a moments notice when your target rate becomes available.
The news media is very good at giving out headlines, but never the whole story. Behind this story is not just the low rates that we are seeing, but the volatility in the market that creates wild swings in intraday bond trading.
Luck is nothing more than preparation combined with opportunity. So, prepare yourself for the opportunity to get a great mortgage loan in the coming weeks.
If you would like to discuss your mortgage for the opportunity to lower your rate or get a fixed rate to replace your ARM, call me anytime at 850-221-8334, e-mail me or visit my website at www.SteveRussellOnline.com.
Steve Russell
Mortgage Banker
Primary Residential Mortgage
850-221-8334 Cell
850-497-6325 Office
888-257-8383 Toll Free Voice and Fax
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{ 4 comments… read them below or add one }
Yeah you are telling the truth. Timing is very important when working with real estate transactions. If you dont act quick you will lose out.
Steve,
I can sure see how the volitility in the markets makes your job tough. With all the bad press on the industry people are less likely to just someone and then when you told them rates went up a quarter of a percent in three ours they do not believe you. To bad so many crooks came into the business during the boom maybe we wouldn’t be dealing with all of this trouble now.
This just shows how important it is to have a Realtor that you trust who can get you the best rate when it is available. There is a good lesson here about being ready to buy when the time is right.
Sometime the loan officer likes to gamble with the rate lock in hoping that the rate will drop further which will result in the LO earning a bigger commission. When the bet is lose the LO will have to cover for it out of pocket. To be sure that your rate is lock make sure to ask for a written verification from the lender and not the LO. The actual investor that is funding the loan.
Andrew’s last blog post..Basic mortgage information that you need to know.