Locking Your Loan in a Backed Up Mortgage Market
With little activity on the home buying front, it seems weird to call the current mortgage market, “backed up”, but it’s true! The lines at every loan officer’s window seem to stretch out forever. The problem however, is not volume, but a longer process.
Applying and being granted a home loan is never going to be a short process. Unfortunately, with new standards on documentation and so much scrutiny on lenders to act in good faith, no one wants to make a wrong move. This means double or triple checking credit history and past financials. The result is that open applications are stacking up. To add to the mess, interest rates have begun to rise and left many wondering how soon they can get a lock on their future interest rate while they wait.
It’s a Policy Issue
The reason that so many are confused about just when they will be able to lock their rate is because every lender has a slightly different set of checks they require before a rate lock can occur. Typically these requirements center on having the appraisal done, all documentation in order, and even required information about homeowners insurance gone through. If any of your lender’s requirements are not met, they will not be able to grant a rate lock.
Our resident Mortgage Professor, Jack Guttentag, has a three step process to getting the rate lock you want:
Step 1: Find out exactly what your lender requires to lock your rate.
Step 2: Usually the appraisal and title report are required to get a lock, but most lenders will allow you to make them conditions of keeping the lock rather than getting it. The rest is just documentation which, if you are smart, you have submitted along with your application. This means that you will be able to lock right away. The ball is now in your court, congratulations!
Step 3: Remember that the locking price will be the interest rate at the time you lock, not the initial rate quoted when you received your GFE (Good Faith Estimate). These two rates can be very different. Make sure that you are getting competitive rates by comparing the lock offer with other lenders or online. Of course, if you’ve already created an account with , you’re ready to compare your options.
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- Mortgage Rates Stay Low: Now’s the Time to Rate Lock
- How to Find the Best Rates on Your Mortgage
- Mortgage Rates Spike. Is Your Rate Locked In?
- Mortgage and Refinancing Tips for the Self-Employed
- The Truth about No-Cost Refinancing
