Home Buying in Wood Ridge>Question Details

Joana, Home Buyer in

Is our mortgage broker being shady?

Asked by Joana, Tue Jun 4, 2013

My boyfriend is taking a giant leap and buying a house in his hometown in NJ. Closing isn't until June 27, 2013 (we've been waiting since mid April) since the sellers have a child in high school who is graduating. Anyway, my boyfriend signed the Loan Approval Agreement on May 17, 2013 with a mortgage rate of 3.65%. However, below that it says "Rate Lock Status: Prevailing". This is where the problem comes in. The broker called him and said that the rates went up so his new rate would be 3.99%. I told my boyfriend that he signed the loan approval at 3.625% so that's his mortgage rate. Who's in the wrong here, us or the broker? Also, what does "Rate lock status: Prevailing" mean? Any additional information would be extremely helpful. Thanks!

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For your information, Curly Sue, I ASKED if he was being shady since I didn't know what that meant. Obviously, my question was answered and I didn't need your smart ass remark.
1 vote Thank Flag Link Wed Jun 5, 2013
Never locked the rate. Because the rate was not locked, you're subject to the current market rate.

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Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 606-9648 Cell
(631) 659-2011 Office
(516) 918-5383 Fax
1 vote Thank Flag Link Wed Jun 5, 2013
How is your lender shady if "Rate Lock Status: Prevailing" is stated clearly on your approval? You're wrong. His rate is the prevailing rate.
0 votes Thank Flag Link Wed Jun 5, 2013
Hey Gerald, thanks so much for answering my questions so quickly. Sorry for not offering all those other pieces of information such as credit score, points being charged , or what type of loan. I don't ask him these questions since his anxiety has gotten a bit worse since the home buying process began.

However, since you were great at answering my first questions, I have some more for you. Is there any reason as to why his mortgage broker didnt lock in the lower rate? If he locks in the 3.99% rate and a smaller rate floats along closer to the closing date, will he be able to grab the lower rate or will he have to stick to 3.99%?
0 votes Thank Flag Link Tue Jun 4, 2013
1)Why the rate was not locked should be a question asked of the Loan Officer; my guess is he did not expect the rate market to move like it did, and also hesitated locking in the rate that far in advance of closing.
Locking the rate protects the borrower from rates going up, but also once the rate is locked, if rates go down slightly, it is not possible to get the lower rate either. A rate lock is to avoid the fluctuations in the market.
Flag Wed Jun 5, 2013
from your description, there is no mention of a locked rate. "Rate Lock Status: Prevailing" means that the interest rate was floating and will be the prevailing rate. This should have been discussed with your boyfriend and he should have been given the option to lock for a predetermined period of time or continue to float. Interest Rates are usually locked in 15 day increments and the longer the rate lock period, the more affect it has on the available rate.
The market had been relatively flat with slight ups and downs over the last few months with little impact on rates; unfortunately, the last 2 weeks have increased volatility and rates have started to climb. This week is especially volatile with daily market movers and the unemployment numbers being released on Friday.
If you can lock @ 3.99% and be assured that the closing date is set and that the lock will be guaranteed through the closing date( a few days extra would be recommended for unforeseen delays), I recommend locking the rate now.
You did not mention if this is an FHA or Conventional loan, Credit score, and if there are points being charged to obtain that rate. I assume that this is 0 points. There is a slight difference in rate between Conventional or FHA but 3.99% is a decent rate as of today for either loan.
No one has a crystal ball and the market can improve slightly before you close at the end of June but I do not expect rates to return to the recent lows we saw.
I wish you smooth sailing and best of luck on the home purchase and closing!
0 votes Thank Flag Link Tue Jun 4, 2013
Correction: signed loan approval agreement on May 17, 2013 with a mortgage rate of 3.625%
0 votes Thank Flag Link Tue Jun 4, 2013
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