Can you modify the locked mortgage rate once you find a better deal later?

Asked by Jay, Aurora, CO Tue Dec 2, 2008

It seems that the rate is moving a lot recently in either direction. Also I wonder if changing locked rate results in some penalty or requires certain condition such as a big down payment. Thanks in advance.

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Dallas Texas, Agent, Dallas, TN
Tue Dec 2, 2008
You need to contact your mortgage broker who can answer all of your questions. It depends only your broker will know all.
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1 vote
Jay, Home Buyer, Aurora, CO
Wed Dec 3, 2008
Thank you for educating me. The reason I asked this question was that two lenders I talked to in person gave me two different answers.

0 votes
John Jeffrey, , Centennial, CO
Tue Dec 2, 2008
You can if your mortgage professional can send the loan to another lender. Wholesale lenders that service brokers have what they call "fall out rates". If the broker locks a loan and then doesn't close the broker risks being cut from being able to use the lenders programs at all. No one I know is willing to do this in this market. Lending sources are drying up everywhere. You have to respect the people that are working hard for you. There are no guarantees that if they switch lenders for you that you will even qualify under the new lenders guidlines. Understand that in this market if you are comfortable with the payment and you like the house, buy it. There are too many risk factors that the market, (not you, your lender or your realtor )are in control of. If you gamble for a rate that you "think" you should be able to get because your friend is bragging about how low of a rate he got, be prepaired to lose. Listen to the people that you hired to do a good job for you, your lender and your realtor. They are working to make sure you are happy enough to referr them more business. If you don't trust them, you are working with the wrong team.
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Cameron Piper, Agent, Forest Lake, MN
Tue Dec 2, 2008

It really depends on the lender. My advice to you is to stop looking at rates if you have already locked in. The agreement that you signed said that if rates go up the lender loses, but if rates go down you lose. In the end you need to honor your agreement unless the bank is willing to let you relock.

Do yourself a favor though and stop watching rates. I know that this really hard to do, but you must do it or you will drive yourself crazy.

Cameron Piper
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0 votes
Jim Cavoto, Agent, Denver, CO
Tue Dec 2, 2008
This depends on a lot - if you want to stay with your current lender, they may or may not have a policy that says once you lock you are kocked - or they may let you take a drop, if rates drop- this is one of the reasons to use a broker, not a bank- a broker will watch out and lock it when it looks good to lock BUT if rates drop brokers always have a 2nd or 3rd lender that it can be relocked at- plus good brokers tend to know where the best rates are- Example shows the average 30 year fixed today at 5.7% - we have source wholesale that the rate is 5.25% - with no buy down
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Brian Burke, Agent, Highlands Ranch, CO
Tue Dec 2, 2008
Are you under contract and waiting to close? If so you may want to ask your lender.
We have a client under contract that his lender shopped around and found a different investor and got our Buyer a better rate. You may have to do this to close on time.
If you already closed you may want to look into doing a re-fi
0 votes
Jude Sandvall, Agent, Denver, CO
Tue Dec 2, 2008
It can be changed but it will usually result in some type of charge.
0 votes
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