Dumping A Rate Lock

Now my wife wants to know if your wife liked the show?... oh, no... let's not go there...

Kent Mikkola:

Now my wife wants to know if your wife liked the show?... oh, no... let's not go there...

Hey Clem & Kent, they got this thing these days, I'm not sure exactly, but I think it's called 'Domestic Partners', you guys might wanna check it out on one another... 

akaagassi:

Hey Clem & Kent, they got this thing these days, I'm not sure exactly, but I think it's called 'Domestic Partners', you guys might wanna check it out on one another... 

 

Jealous?

Hey not that I'm judging but I've already got one wife.  Why on earth would I want another?

I'll say it again... Ask for a relock at no charge. If they won't, then ask what the charge would be. It could be a lousy 1/4 percent and that is peanuts compared to what you've invested.

It doesn't hurt to ask.

Repeat... It doesn't hurt to ask.

Obviously I'm the only broker here who is looking at it from the view of the customer. I wouldn't care one lick what the lender's costs are or if the lender drops the broker, I'd care about my own personal finances. The lender will make plenty of money from your finance charges, that's why they lend money. Play hardball and see where the chips drop.

Customers do it to me every day and I do it for the ones who stay with me. This is not a monopoly game, this is years of your money in payments. I don't work for the lender, I work for my client. If I wanted to work for a lender, I'd sign up at a bank. Make your broker earn his money and you just might get lucky. No matter what happens, don't feel bad for everyone else. You're dealing with sharks and you need to keep your teeth bared.

I'm not saying your going to get it, but I'm saying fight for it and don't go down without being knocked out.

a17:

Obviously I'm the only broker here who is looking at it from the view of the customer.

Hey now. I said that to start with and took all the Broker heat for encouraging a consumer to break a lock. Of course they should ALWAYS give the lender the opportunity to do better.  But when that fails then it's time to do what's right for your family (not to mention legal, except for Minn.) and find the best payment. Moving for .125 or even a .25 in rate doesn't make it worth while but over that makes you think.

Okay so lets say that you dump the lock and you lose $3600. The payment difference in the new improved rate is $75, let's just say. It will take you 48 months to recoup the cost of the lost funds. Not to mention that you will probably have to pay another 1% (towards origination) on your new loan/rate. So that would be over $6,000 for this "better rate". 90 days is a long time in terms of rates. They fluctuate quite a bit. I would recommend working with your loan officer and the lender and floating down before taking it to another lender. You already have a lot invested. They should be able to work it out for you.

Clem and Kent, do you agree?

I do to a point.  The math is really what matters.  How long to recoup costs, etc.  One thing that's worth noting that I don't know if we talked about yet is that rather than losing the point and going elsewhere to get a better rate (and pay the point again most likely) ask about paying another point where you're at to get a lower rate.  You end up spending the same amount of money but you don't go through the brain damange of applying.

High of 70 and sunning today in Colorado Springs. Ahhhh, sweet, sweet global warming.

Carroll Hoselton:

Okay so lets say that you dump the lock and you lose $3600. The payment difference in the new improved rate is $75, let's just say. It will take you 48 months to recoup the cost of the lost funds. Not to mention that you will probably have to pay another 1% (towards origination) on your new loan/rate. So that would be over $6,000 for this "better rate". 90 days is a long time in terms of rates. They fluctuate quite a bit. I would recommend working with your loan officer and the lender and floating down before taking it to another lender. You already have a lot invested. They should be able to work it out for you.

 

Clem and Kent, do you agree?

That is another way of looking at it.

One thing I don't think we explored:  Since you would pay another 1 pt for the extended lock at the next lender, what rate would your current lender give you if you used that money to pay discount fees on your current loan.  You may get better use out of the money that way.

Clem Borkowski:

One thing that's worth noting that I don't know if we talked about yet is that rather than losing the point and going elsewhere to get a better rate (and pay the point again most likely) ask about paying another point where you're at to get a lower rate.

OK... so we were thinking along the same lines... great minds you know.  I guess I should learn to not leave my responses up when I am working on something else without coming back to see if someone covered my comments yet... lol.

I think it's funny that in all the responses we've posted to this point, something in the last post made us both think of something we haven't yet. I don't know what it was but it's funny.

Clem Borkowski:

I think it's funny that in all the responses we've posted to this point, something in the last post made us both think of something we haven't yet. I don't know what it was but it's funny.

I think it was something we explored in another post.  It was just opportunity that brought it up here.

This is one reason that it is good to give free advise... keeps us on top of our game and we are ready for the customers that come to us with similar issues.

I figured I'd update since this question still keeps going...

I never moved on anything with this situation.  Rates never got quite low enough to "pull the trigger"  we locked and within 2 days we could have been about 3/8% lower.  However, that wasn't enough with the other two lenders I was following to put me at the same or lower rate with no points.  Had the one gotten 1/8% better, I could have gotten the same rate at 0pts (thus costing me no more), locked for the same time period (which would have been ok since I never paid the full 1.5pts to the first lender), and had a float down that was an 1/8pt cheaper.

At this point I'm just watching rates closely.  Just about everyday goes by and I know I can have a better rate than the 5.125% I locked at, but I'm looking for maybe something 3/8-1/2% better that maybe I can convince them to let me use my lock a little early.

I do appreciate the discussion with this.  These volitile times seem to bring up some interesting scenarios.

Wish Mississippi had the same law!  Some of our customers shop around and lock with several different mortgage companies.  We sometimes don't know because they are cowards and just won't return your phone calls so they won't have to tell you they that have locked elsewhere for a mere .125 difference.

Often, when a customer won't call you back, it is a "polite" way of saying, "Not interested."  I always ask my customers to tell me either way so that I don't spend several days trying to reach them when I could be helping somone else.  I just let them know that saying no is ok, it won't hurt my feelings and that I actually prefer a no to an excuse.

CHERYL BIRCH:

Wish Mississippi had the same law!  Some of our customers shop around and lock with several different mortgage companies.  We sometimes don't know because they are cowards and just won't return your phone calls so they won't have to tell you they that have locked elsewhere for a mere .125 difference.

That happens everywhere. That's why I never lock until the appraisal is paid for so we are both committed.

Never move in with someone who doesn't want you to live with them.