my rate on my escrow and bank paperwork says my rate is 4.875 and I want to lock in at the lower rate but it seems to a problem, I think I should

Asked by Cathy, Palm Desert, CA Sun May 29, 2011

seek an attorney before signing loan documents but afraid I will lose my deposit and home. But, I do not want the 4.875 so again, now what?

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Sandra LaFla…, Agent, Sarasota, FL
Sun May 29, 2011

Fixed mortgage rates hit the lowest point of the year for the third straight week. These are for the best credit scores and very low debt ratio's

Freddie Mac said Thursday the average rate on the 30-year loan fell to 4.60 percent from 4.61 percent. That’s the lowest point since mid-December. The average rate on the 15-year fixed mortgage, a popular refinance option, slipped to 3.78 percent from 3.80 percent. That marked the lowest level since late November.

Rates have fallen for six weeks in a row. Will they fall further????

They tend to track the yield on the 10-year Treasury note, which crept lower this week on worries over Europe’s ongoing debt crisis.

While low mortgage rates make purchasing a home more attractive, sales are still slumping....meaning -- there is an opportunity cost to buying the home -- as well as locking in a good rate.

Specifically for all home buyers....Attorney review before you sign any real estate document is always advisable.

Contractually, you will want to look at escrow and review options on what ever document you have. As this is a holiday weekend, it may be Tuesday until you can be face to face with a professional who can render a good option for you.

Does your Realtor have good referrals for you that can help you in the mean time?
2 votes
Terri Vellios, Agent, Campbell, CA
Wed Jun 1, 2011
Your agent and lender should be able to answer this. In the rate disclosure document there are two numbers the first number is the percentage of your monthly it could say something like 4.625% Then there is the APR which is how much the loan is costing you and that could be the 4.875%. The government requires lenders to show what the cost to borrow will be based on a percentage of the monthly plus all loan fees and factored into a percentage.

I would look at the difference of what you are being charged vs what you think you can get and then see what that cost variance is. For example of you are financing $300,000 and the difference is .3% the difference is about $75 per year. If you plan on staying in your home for 10 years this will be less than $750 (as interest reduces each year so $75 this year will be less next and so forth).

If you have a good faith deposit and you risk loosing that, or having to redraw your loan documents or loose out on the deal it could cost in excess of $750.

Is the fight worth it?

Get an explanation so you can fully understand what you are getting.
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Rudi Hofmann, Mortgage Broker Or Lender, El Segundo, CA
Thu Jun 2, 2011
Sounds like you have received your closing documents for review. The rate stated on them indicates you have already locked in the rate. After you locked in your rate, rates could have gone up. Would you be upset if that had happened?

Happy funding, Rudi
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Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Sun May 29, 2011
I was going to stress the importance to you of really knowing the process from beginning to end before you make an offer on a home, but unless you have a time machine you you can't get back to that point, so you are going to have to work with your options from here.

I believe getting a real estate attorney to review the escrow & loan application information won't be a good use of your money. Attorney's are expensive. Instead use another professional you are working with, like your real estate agent as well as non-profit agencies or other inexpensive resources. While real estate agents aren't usually also mortgage loan officers, many of them have some mortgage background or have connections to loan officers. So if needed, they can have the paperwork reviewed by one of their trusted loan officers, and then they can talk to you on the phone about any of your questions & concerns.

When you lock in an interest rate, you will get a Good Faith Estimate which will specify the interest rate and rate lock period/expiration date. is what the Good Faith Estimate looks like. Look at "Important Dates" on page 1. Is there a # of days listed in #3? If so, then your interest rate is locked and that is how many days you have until it expires (from the date of the GFE at the top right of page 1). If it has a "N/A" or something similar, then it is not locked and your interest rate is "floating" with the market.

A lot of lenders will also send a "Rate Lock Disclosure" with more or less a written description if your loans interest rate is locked in or not.

I am a bit confused on what "escrow and bank paperwork" this is. There is a lot of paperwork that goes to the buyer in a purchase transaction here in California. The lender may send you an initial application & disclosures with a "TBD" address on them, then after you get an accepted offer then you'll get an application & disclosures with the exact details of your transaction (address, purchase price, loan amount, etc.). The escrow company will also send you out an initial package called the "Escrow Instructions" along with other paperwork (some of which needs to be completed and sent back). Once your interest rate is locked in, by law you are required to be sent new redisclosures including a good faith estimate with the interest rate, rate lock period, and other details. After your loan has made it through the entire underwriting process, and the lender has cleared your loan to close, and after your rate has been locked, then the lender will send a final set of documents to the escrow company to prepare for the loan signing (in front of a notary). Is that the paperwork? So this paperwork could be those initial loan application & disclosures & escrow instructions, which you'd certainly want to go over, but are not the loan terms set in stone... or it could be the final paperwork you are going to be signing in front of a notary, which would be THE most important paperwork you'll be signing to buy your home. It needs to be clarified, or you'll be getting advice that is all over the map.

Other questions I have...

1. When was your offer accepted?
2. When is your anticipated closing date?
3. Are you qualifying for the CHDAP down payment assistance program? Or are you saying the home that you are purchasing it as a 2nd mortgage from CHDAP on it?
4. Is your 1st mortgage through CalHFA?
0 votes
Cathy, Home Buyer, Palm Desert, CA
Sun May 29, 2011
Ms. Voss

I have just received the loan papers from the bank and I do not understand them and I will talk to real estate attorney to understand better. I had asked to locked earlier but that did not happen. So, I asked going into escrow and nothing, and then wednesday, but I feel if I sign the documents then I am locked the house has a CHDAP Second. this is my very first little house and it is a flip. I have no debt because for years I have planned to buy a house. Now its here ,,,,, I just do not want to a static in the mortgage problem. I want to own and own the with best possible loan.
0 votes
Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Sun May 29, 2011
Are you going to borrow money from the attorney? The average interest rate since 1971 is 9%. Why do you think 4.875% is too high? The type of loan, amount of down payment and credit scores all influence the final rate.

If you do not want the 4.875% don't take it.
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