Financing in Los Angeles>Question Details

Jerati, Home Buyer in Santa Monica, CA

LOCKING INTEREST RATES

Asked by Jerati, Santa Monica, CA Tue Jun 9, 2009

On a short sale, when is it advisable to lock my interest rate? Do I have to wait for the short sale to be approved by the lender before locking? I'm very concerned because interest rates are climbing. I'd appreciate any suggestions on what to do at this point. Thanks.

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Answers

6
Thank you to all for your advice. I will touch base with my lender and agent and hope for the best with this short sale, and that rates don't go crazy!
0 votes Thank Flag Link Wed Jun 10, 2009
Hi Jerati,

I agree with the answers below. Don't lock in your rate until you have an approved demand statement from the first lien holder approving the short sale. If there is a second lien holder, be sure that an AGREED TO payoff for that loan is factored into that demand statement (meaning that you also have to have an approved payoff amount from the second lender).

I wanted to add that if you are getting a Fannie Mae backed loan (check with your lender) you will probably not be able to lock in a rate until your appraisal is complete. I'm not a lender. But in representing buyers exclusively, I know that new underwriting guidelines in lending are affecting the chronological order of these things. Be sure to get all your questions answered by your lender up front before you open escrow. And make sure you have an knowledgeable one that can. Let me know if you need a referral.

Best of luck!
Tara

Tara Steinke
San Diego Real Estate Specialist
Residential Sales and Appraisal
619-384-6014
SDRealtor.Tara@gmail.com
Web Reference: http://san-diego-homes.net
0 votes Thank Flag Link Tue Jun 9, 2009
Hi Jerati, Check with your agent on this and especially about the banks approval on the short sale. Short sales usually take longer so be careful

Kind Regards
MichaeL Barron
Realtor
0 votes Thank Flag Link Tue Jun 9, 2009
Hello and congratulations on buying a home !

Do not lock in the rate. It sounds like you still do not have an approval from the bank on the short sale. The lock is good for only a short period of time, not long enough to get the approval from the bank selling you the short sale.

Besides, it may cost you money to lock it in and you are not ready yet to close.

Norma
broker
californiaHomes_Mortgages@yahoo.com
0 votes Thank Flag Link Tue Jun 9, 2009
Jerati,

To the best of your ability, keep things in perspective. Often when I speak with borrowers who are concerned about rising rates, I ask them to tell me what kind of payment they expected when rates were "low" and what payment they are looking at now that rates are "high." I rarely get an answer to this question in dollars in cents. Meaning, many borrowers just get hung up on the fear part of the equation, but not the actual payment part of the equation. Let me know if you need help analyzing the best-case and worst-case scenarios, because this information will help you keep things in perspective.

Finally, without a firm close date or accepted offer from the bank, any lock you put in place is a false security, at best. If you don't meet that lock date, you will likely face costly extensions which may undermine your best intentions. Not to mention, a lock expiration date inherently causes stress in a situation in which you don't control all the variables.

Rates ALWAYS get better and worse over time. It is never a one way street. Again, keep things in perspective and let me know if I can help.

Best regards,

Rob Spinosa
rspinosa@mortgagemasterinc.com
0 votes Thank Flag Link Tue Jun 9, 2009
Do not lock your interest rate unti the price has been approved by the bank. You only get a 30 to 60 day lock and sometimes it takes far longer on a short sale.

Brad Roth
realtor
Encino ca.
818-933-3103
Web Reference: http://www.bradroth.com
0 votes Thank Flag Link Tue Jun 9, 2009
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