What’s influencing mortgage rates this week, what may impact the direction of mortgage rates this (and next) week and 10 factors that impact the pricing of your mortgage rate in this week’s episode.
Mortgage Market Update for the week of October 21, 2024
October 21, 2024 by Leave a Comment
Lenders Increasing Extension Fees
December 19, 2013 by Leave a Comment
I’m receiving notices from a couple of the lenders we work with that they are temporarily increasing rate lock extension fees due to Fannie Mae’s increased guarantee fees (LLPA) that will hit us in 2014. An extension fee is an additional cost that may be charged in order to keep a rate locked when the rate lock is expiring.
Major Bank Jacks up the Cost to Extend Rate Locks
September 10, 2012 by Leave a Comment
When a mortgage rate is locked, it’s committed for a certain period of times, such as 30, 45 or 60 days. When a mortgage refi or purchase that has been locked does not close by that date, the lender may charge a fee to extend. The fee is essentially the cost to buy additional days to add to the original lock commitment.
I just received this notice from one of the lenders we work with that they’re dramatically increasing their extension fees and, even worse, they’re only giving us ONE DAY’S NOTICE! Kind of stinky if you ask me. This is the same bank that increased their fees just over a month ago. The bank is doing this as a result of the 0.10% increase to G-Fees by Fannie Mae and Freddie Mac.
Thankfully we work with several lenders and we’re not limited to only working with this bank.
More often than not, it’s better to error on having a longer lock period than a shorter one and paying for an extension.
UPDATE: Another bank just announced they are increasing their pricing by 0.500% basis points to their rates (not extension) as a result of the “G Fees”.
Tis the Season for Vacations
August 9, 2012 by Leave a Comment
Many families are squeezing in a vacation during the remaining days of summer. I can’t blame them, I’m just back from one myself! If you are in the mortgage process, it’s critical that your let your mortgage originator know of any vacation (or business travel) plans.
If you’re going to be in a spot where you can receive important documents and respond to emails, it may not be a huge issue. If you’re going off the grid, it may impact your rate lock commitment if your loan is currently locked. Your mortgage originator will need to price out a long enough lock period for your loan (if you’re locking) or you may opt to float and not lock in the current rates available. And of course, if you run out of time with your lock, the rate lock commitment may be extended.
Another factor is signing your final loan documents. Escrow companies can email (I do not recommend sending final docs via email) or send your loan documents via something like FedEx or UPS. This can be a bit risky as well as if a signature is missed or something is not notarized properly, your transaction may be delayed.
The more notice you can provide your mortgage originator about vacation or business travel, the more time they will have to prepare your options for the mortgage process.
Major Lender Increases Cost to Extend Rate Lock Commitments
August 7, 2012 by 3 Comments
Yesterday we received a memo from one of the big 3 banks notifying us of an increase to extension fees on all conforming mortgages on locks effective August 9, 2012 by 0.125%. An extension fee is an additional cost associated with extending the rate lock period of your mortgage loan. For example, if your loan is locked for 30 days, and it takes more than 30 days to close the loan, there will more than likely be a fee to extend the rate lock commitment long enough to close the transaction. Just like a rate lock, the longer the time period that is needed, the higher the cost is. It is typically more cost effective to have a longer lock period than to pay for an extension.
Each lender we work with has their own rate lock and extension policies. Here is what it cost to extend with this lender:
It’s important to note that this is NOT Mortgage Master Service Corporations general extension fees. We work with several lenders and what ever their fees are to extend are passed on to the transaction. One lender that we work with currently offers extensions on a daily basis (instead of blocks of time) so at a cost of 0.025% per day. If we only need 5 days for an extension, the cost would be 0.125%.
Everyone likes to keep cost down and avoid extension fees. This is why it’s critical to provide your mortgage professional with requested documentation promptly, especially once your loan is locked.
