If I locked in a rate with my mortgage bank, get the commitment letter, and then the rate goes way down. Am I under any legal constraint to go through the deal with them if I find a better rate with another bank? Or is this more of an ethical dilemma?
2007-08-18 02:22:41 · 9 answers · asked by PoMoFo 1 in Business & Finance ➔ Renting & Real Estate
If the rate had gone way up since you locked your loan, would you be okay with the lender giving you a higher rate? Of course not. That is the purpose of the lock - to secure the rate. The ethical thing to do is to close the loan at your the agreed upon terms.
However, if you are considering foregoing your integrity to shop other lenders, you should at least give your current Loan Officer the chance to renegotiate the rate with his/her investor. If you are with a mortgage broker, the LO may be able to switch your application to a different lender.
Keep in mind however that mortgage guidelines are changing quickly and the program you are approved for may no longer exist. Your lock is not only protecting your rate, but also your program. So be careful before you pull your application. Should you find yourself unapproved and not able to close, your rate will suddenly not be the biggest concern you have.
Talk to your LO, a lot can be accomplished with honest communication.
Best of luck to you!
2007-08-18 02:43:39 · answer #1 · answered by Mortgagemom 3 · 0⤊ 0⤋
I don't even think it is an ethical dilemma. Most lenders do not close under any terms other than the lock once it has been submitted. There may be exceptions, but in general the lock is you and the lender agreeing to that rate. In fact, they are taking this lock commitment to you into account while they are managing their own liquidity. But if the rates go "way down" (and that doesn't happen very often frankly) you are entirely free to take your business elsewhere, and I don't think there's even anything ethically wrong with that. Some lenders try and dissuade you from doing this by charging application and lock-in fees - but that's just because they are afraid of people shopping and comparing. Plenty of reputable brokers do not charge either of those fees.
Ultimately you will be best served by utilizing a mortgage broker who can lock your rate in with one lender, while keeping an eye on what the market offers with other lenders. That way you'll get the best rate whether rates go up, down, or stay the same.
2007-08-18 17:10:01 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If you paid an application fee or a lock fee, then it comes down to if it's worth the cost.
Do you know for a fact your rate went down or are you just watching the news? In the past 2 months, most mortgage rates have gone through the roof with the exception of the 30 year conforming fixed mortgage under $417k. that rate probably hasn't gone down far enough to walk away.
2007-08-19 00:16:25 · answer #3 · answered by The Smart One 4 · 0⤊ 0⤋
Depends on your agreement... and the company.
For example, I am in the mortgage process now. I am going with a credit union, and they have a really good deal. Originally, I was locked at 6.875%, but the rate went down to 6.25% recently... and the lock automatically sets to whatever the lowest rate is during the lock period.
I would call your mortgage company and tell them you want a better rate. If they wont work with you and you have no money in the deal and you are not in a contract, then feel free to shop it again.
2007-08-18 09:53:14 · answer #4 · answered by Mike 6 · 0⤊ 0⤋
You are not obligated to the mortgage company until you sign the documents at closing, other than items they insisted that you pre-pay (appraisal, rate-lock fee).
The rate lock is a cap. If rates go down, they'll give you the lower rate.
There's no ethical dilemma. Do what's best for you.
2007-08-18 09:30:28 · answer #5 · answered by open4one 7 · 2⤊ 0⤋
i would think you are obligatted to the locek rate as long as you close within the term the of the lock , rate locks before 30-45-60-90 days whatever the term is.
i know that if a lock passes its time limit and the rate goes up you would have to take a higher rate so it would only seem fair for it to go both ways.
but for the record i forsee no chance of the interest rates going down in the near future and even though the fed has made a cut it is not going to affect mortgage rates much
2007-08-18 09:28:41 · answer #6 · answered by beachlover 2 · 0⤊ 1⤋
If you paid to lock the rate then you lose that money, but if you didn't then you can walk away.
2007-08-18 09:31:34 · answer #7 · answered by glenn 7 · 0⤊ 0⤋
Ditto open4one.
2007-08-18 09:37:49 · answer #8 · answered by Anonymous · 0⤊ 0⤋
depends on how long your cooling off period is?
2007-08-18 09:30:05 · answer #9 · answered by Anonymous · 0⤊ 1⤋