Aggressively defend your rate
lock
By Holden
Lewis • Bankrate.com
Getting a mortgage isn't for the
faint-hearted -- especially when rates are rising.
That's what Robert Zarrow found out this summer when
he closed on his loan after his rate lock expired. After "several
heated conversations," he got the agreed-upon rate and talked
his way out of a surprise lock-extension fee of $700.
"It is imperative," Zarrow says, that
homeowners "logically and intelligently stand up for themselves,
as customers."
Lenders and brokers agree that borrowers need to
stand vigil over their rate locks, and assert themselves to secure
the mortgage rates that they deserve.
"The axiom that the squeaky wheel gets
the oil -- that's absolutely true in this case," says Rob Bernabe,
vice president of retail mortgage lending for E-Trade Financial.
"The more aggressive people are going to get more service."
A rate lock is an agreement that
the lender will lend a certain amount at a specified interest rate
if the loan closes by a deadline. Since rates started rising in
late June, the mortgage industry has been overburdened, and thousands
of people have been unable to close their home loans before their
rate locks expired.
Many of those folks are out of luck. With a rate
lock, the lender promises to try to get the loan closed on time;
the lender doesn't guarantee success. A lender isn't obligated to
honor the locked-in rate if the rate lock expires before the closing
date. If rates have gone up in the meantime, the borrower usually
is stuck with the higher rate.
But not always. Consider Zarrow, who is a classic
squeaky wheel. He was scheduled to close the loan on his home in
Laguna Niguel, Calif., on June 30. He locked a rate of 4.75 percent
on June 16, paying 1.5 discount points. He kept in touch with the
mortgage company, which told him that there were delays that were
the fault of the underwriter.
The lock expired, and Zarrow finally closed the loan
on July 10. That day, as he reviewed the fees over the phone, the
escrow officer mentioned a $700 rate-extension fee. It was the first
that Zarrow had heard of it.
"Apparently, the loan officer had secured a
15-day lock without mentioning it to me," he says.
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