That rate may not be yours for the taking.
Mortgage brokers and bankers should advise you (the buyer) to lock in favorable rates. Otherwise, you might find yourself exposed to a higher rate that would put you in a difficult mortgage situation. This is one example of the ethics brokers and bankers should practice, while presenting you with information and loan options at the time of your inquiry.
Mortgage rates can change abruptly with the stock market, the inflation rate, and a host of other economic factors… So, how could you lose that favorable lock-in rate?
First, your lender may reason that their office is burdened by paperwork from a huge number of mortgage applications – It’s not an excuse in any way possible. Efficient lenders know how to respond to an increasing number of clients without sacrificing detail. Although you can expect your financing application to be completed in 30 to 45 days, the usual time period for a loan to be close today is up to 60 days.
Second, lenders may hold the application deliberately during periods of rising rates. They can obviously earn higher when they don’t deliberately lock your rate, in anticipation of increased borrowing cost.
Third, given the Fed’s intervention in the bond market, lenders can put you in a dilemma. The return of mortgage rates back above 5% from this year’s historic 4.5% low is clear indication the government will buy more bonds to keep yields low – but for past weeks, the market seems not to actively cooperate. Those that decide to lock-in may become too credulous, should the Fed eventually push yields down.
So when seeking out the best lender in your area, ask for referrals from your friends and neighbors. They can offer that advise that you wouldn’t find elsewhere… Securing that rate is as crucial as buying that house!