Financing in Los Angeles>Question Details

Shelley Bero, Home Owner in Los Angeles, CA

My 30 day loan lock has expired. Can I get my loan rewritten to take advantage of repricing for the better?

Asked by Shelley Bero, Los Angeles, CA Sun Jan 1, 2012

My 30 day rate lock expires tomorrow & I still don't have final approval of my loan. This is because the lender requested more income documentation at the last minute. Howerever, loan pricing has improved substantially since I locked. I would now get maybe $1500 more in lender credit (negative points) at current pricing. Do I have the right to ask that the loan terms be changed to reflect this improvement before I sign?

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Every lender has a "lock policy" for rate negotiation and/or expiration. Some lenders offer a "float down" policy that will allow the rate to be reduced if the pricing improves (In my experience, however, lenders who offer float down rates typically start out higher that most lenders with normal rate lock policies), You will have to talk with your mortgage consultant to see what their lock policy entails.

A lender may allow for a renegotiation if rates have improved significantly (1% or more); however, it is very unlikely that they will bring the rate to current days' pricing. Typically. the lender will split the difference and negotiate for half of the improvement or less. If rates stay the same or have increased from the original lock, there is typically a charge for the extension. Despite the fact that your lock is expiring today; the lender has issued a commitment for delivery of your loan to the investor and the lock does not just go away at midnight. Typically, your lender would require your current lock to be expired for 30 days before they would re-lock on current days pricing.

Your lender does not want to lo lose your loan to another lender (really your only option for getting current day's pricing is to go to a different lender and start the process all over). Talk with your mortgage consultant to see what they will do. Do be aware that some lenders will not negotiate on rate locks at all....again, every lender has a written lock policy and that is the "letter of the law" for any lender. Good luck to you.
3 votes Thank Flag Link Mon Jan 2, 2012
Chanterelle:

In addition to what others have said, keep in mind that the rates you see quoted on the internet apply to very few borrowers (great credit, high reserves, minimum 20% down, conforming loan amounts or lower, etc). Also, looking at rate trands over the past 30 days, although there was a drop in rates right after Christmas, it looks like rates have bounced back up to where they were 30 days ago.

Discuss your specific situation with your lender and see where you really fall with regards to rates. Dare to Dream.

Shel-lee Davis, QSC®
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1 vote Thank Flag Link Mon Jan 2, 2012
Dee Dee nailed this one, I have nothing to add. :)
0 votes Thank Flag Link Thu Jan 5, 2012
Many thanks to all who posted advice. :<)

I just got a copy of the lender's rate lock policy & they will give a free 12 day extention. But the loan terms are subject to "worst case repricing". I take that to mean: if pricing takes a turn for the worse, I lose my lock terms & get rewritten at the new, less favorable terms. But if things have improved, too bad for me.
0 votes Thank Flag Link Wed Jan 4, 2012
Chanterelle,

This is a tough situation and one that I always hate hearing about. That said, here's how I would proceed:

A) If you're going to stick with this lender, focus on getting the loan done, and not getting the best rate (for now). If you get into a battle with your lender and turn them into the enemy, it hurts your prospects of getting to closing. Ask that they provide you with your pricing options, and ask that they define the timeline and the likelihood of success. If they cannot provide the last two, think about Option B:

B) If you're going to move to another lender, have all of your documentation ready, be prepared to pay for another appraisal, and try to start this process where the current one is ending. In other words, give your new lender every advantage from the experience you just went through. Sometimes in these cases, I can turn an approval and close in under 20 days.

Again, you're in an unenviable position, but to the best of your ability, put your closing first and your pricing second. Once you're in, you can always revisit the financing. If you don't get the home, all is lost.

Let me know if I can be of service!

Rob Spinosa
rspinosa@rpm-mtg.com
0 votes Thank Flag Link Mon Jan 2, 2012
C LA- You may what to see my Trulia Blog on Rates. Then scroll down to rate locks. You made a commitment when you locked you would honor that rate even if rates went lower. On the same token the lender agreed to honor your locked rate even if rates went higher.

If a rate lock may be changed what is the purpose for locking in a rate?

If you allow your locked rate to expire by not agreeing to their rate lock extension fees the lender will either allow you to lock under a worse-rate scenario or require you to wait for 30-days and then re-apply.

Or as previously stated you can choose another lender. Be subject to another appraisal and other out-of-pocket expenses that you may have paid. .... Happy funding, Rudi
Web Reference: http://ww.umboc.com
0 votes Thank Flag Link Mon Jan 2, 2012
Sounds like the bank gambled with you...and lost, since rates dropped. Of course you can renegotiate (you are under no restriction). And if they are uncooperative, you are free to pursue other lenders. As mentioned, your timetable is the only catch. BTW, one of my preferred lenders was just ranked #2 in the nation for lowest rates. (And I receive nothing for their plug.) Will email info. about them if you get in touch.
0 votes Thank Flag Link Mon Jan 2, 2012
I want to express my appreciation to Kathleen, Scott, Dee Dee & SFReGuy for the fast & informative answers that I received to my question. And on a holiday weekend, no less! Thank you for helping me out. :<)

I just asked my mortgage broker for a copy of the lender's rate lock policy. There was no mention of it in all the paperwork I have received. I'll come back & post the outcome when I talk to him.
0 votes Thank Flag Link Mon Jan 2, 2012
Hi Chanterelle:

Yes, you can do that, however, if you are in the middle of a purchase, it may delay the timelines stated in your purchase contract. Make sure that you cover all basis if you are to do this. You have a loan contingency on your purchase agreement. Make sure that you stick to it, if you go over, you will need to get the seller's approval of the extension. Check with your mortgage broker.

Good luck.

All the best,

Kat
0 votes Thank Flag Link Mon Jan 2, 2012
Talk to your loan officer, they should easily be able to assist you with doing so.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon Jan 2, 2012
After it expires you can ask for change in terms. You need to talk to your loan officer and make that request.
0 votes Thank Flag Link Sun Jan 1, 2012
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