Refinancing Advice Break Mortgage Rate Lock

by Homeowner With Question
(USA)

Hi Kate, This post is similar to an earlier refinancing advice on mortgage rate lock. Two weeks ago we locked in a mortgage refinance rate of 5.25%. Normally rates don't change much in the time between a lock and closing, but these are extraordinary times, and rates are probably below 5% now.

With most people expecting the Fed to drop rates by 1/2 point today, I'm wondering whether I should break our mortgage rate lock. My guess is that our lender will say no -- I imagine that he doesn't have a "float down" provision.

We've paid a $350 nonrefundable deposit, but could we be responsible for other fees as well? There was a $350 appraisal. For which other closing costs could we be held responsible?

Can you give me some refinancing advice for a mortgage rate lock?

Signed,
Homeowner With Question

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Hi Homeowner With Question,

In the short amount of time since you wrote, the Feds did indeed lower their funds to a half percent. Yes, I agree with you. These are extraordinary times.

States can have different practices concerning mortgages in addition to federal regulations. So you will have to check with your own state concerning fees you might owe if you cancel your mortgage application. Read through the packet of paperwork you received within three days of making loan application. You might find your answer there.

Don't be too quick to write off your lender having a float down provision. Again, as you said, these are extraordinary times.

In addition to checking with your lender regarding a solution to rates dropping after a mortgage rate lock, consider the following before acting:

1)Breaking a lock without another in place
2)Ordering new credit could lower credit scores and thus raise your rate
3)Ordering a new appraisal when values in your area have been dropping

A certain hysteria begins to prevail during times like this. We saw it after 911. My refinancing advice? Take a deep breathe and map out a game plan. Perhaps that means staying with your current lender. Could it mean asking your lender for alternatives? It could mean switching lenders.

Only you can answer these questions as they relate to your refinance. I wish you the best of luck.

I hope you'll come back to my website Get Your Best Mortgage Rate again in the future. Of course, all of my information is free.

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Best Wishes,





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