Tuesday, following the holiday, rates popped up about a half point to rate. Last week, the very same people I was quoting mid-to-high-4’s to who opted not to lock yet, now are receiving updates with rates in the low 5’s…much to their surprise. Why didn’t they lock? Because some want just 0.125% better in rate and some want the rate priced with zero points (which is a much taller order than 0.125% improvement in rate these days with rebate pricing almost non-existent).
So what can you do if you missed out on a rate you have your heart set on? I’m advising my clients (home owners in the beautiful State of Washington) to proceed with their loan application. We will review their credit report and obtain a preliminary underwriting response. The client can then gather the documents that will be required to proceed with the loan approval.
My clients inform me of what their desired rate/point and provide me with permission to lock in at that their target rate if it is reached. This is referred to as a “forward lock“. Title, escrow and appraisal will not be ordered until that rate is locked. Having a complete file upfront will help avoid lock extensions during a “refi boom”.
It’s also real important to stress that borrowers must be committed to their lender well before locking. I’m hearing of a lot of “double applications” and “double locks”. This impacts a lender or brokers ability to lend. Lenders track lock-fallout ratios and will penalize the originating company for loans not delivered (worse case, they’ll stop working with them. One less lender for a broker to select from).
Bottom line: make sure you’re not chasing after a rate that may or may not happen. Be realistic. Nobody knows for certain where rates will be in the future. But if you have the time and you don’t mind waiting…go for it!