Lock Mortgage Rates and Avoid Hidden Fees

If you lock mortgage rates over the phone, how do you protect yourself against hidden fees? Unexpected cost is the number one problem for home loan applicants when it comes to locking mortgage rates. No exception is Terri who was informed of $2050 in additional mortgage points a few days after locking in her interest rate over the phone.

Respond to Hidden Fees in Writing

My answer to Terri's request for advice is respond to the mortgage company in writing.

Include details of the phone conversation, the verbal agreement and why you decided to lock mortgage rates on that particular day.

Think back to any fees that were discussed.

Send a copy of your letter to the individual representative and the supervisor in charge.

Be aware you might have a project on your hands because I doubt the mortgage company is going to respond with an automatic agreement to eliminate or reduce mortgage points.

Confused over mortgage points and other terminology?

Go to Reducing Mortgage Closing Costs for an easy to understand guide to good faith estimates.

Tip: Check here for current mortgage rates and trends because there is no need to scour the internet when up-to-date information is easily found here.

Locking Mortgage Rates

Keep in mind as a last resort you have the right to cancel your application and switch lenders. To be safe, ask about cancellation fees. And keep in mind, if you lock in rates at another lending company, interest rates could have changed. See my guarantee to those who are unsure of timing their mortgage rate lock.

Ask Kate about Floating a Mortgage Rate

By David from Marietta, GA

Kate,

Can you float a mortgage rate then lock it down when a rate goes down and then unlock the rate, float it again and re-lock it when it goes down again and keep doing this until you are satisfied that you have the best rate?

I would like to continue doing this as I think it could save me money if I watch the rates every day. It is kind of like playing the stock market.

I asked my mortgage guy this question and he told me it costs the mortgage company money every time they lock in a rate. So I could not do this.

Is this true?

Ask Kate answers: Floating a Mortgage Rate

Dear David,

Keep in mind that you will encounter varying lock practices, depending on the mortgage company you have chosen to process your loan request.

This is why it is crucial to ask the right questions before you lock in your rate.

With that being said, I will add that I have never known a lending institution that allows borrowers to lock and re-lock multiple times. If you do run across a loan originator claiming this practice, get a signed and dated mortgage rate lock agreement that puts the specific terms in writing.

Go here to learn the difference between good faith estimates and mortgage rate lock agreements!

Best wishes,

Kate Ford

Ask Kate

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