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If we have locked a rate with a lender are we legally obligated to use them?

We locked in at 4.625% now the rates are almost  half a % lower.  It would save us  alot of money to get the better rate.
  • August 28 2013 - Manassas
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Answers (15)

Hello,

I would contact your current mortgage company and see if they can lower your rate.  Be very careful if you decide to switch, as a "great rate" is only good if that company can get your loan closed.  Our industry has changed so much over the past few years which is making it harder to close a loan.  Rates are not everything, as service is just as valuable.
  • September 04 2013
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No you aren't obligated, however I encourage you to talk to your lender since he has all your paperwork he may be able to match your desired rates. If you are refinancing you  have 3 days right of recession.Good Luck
  • September 04 2013
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Profile picture for JoshBarnettREIB
Have you gone over your concerns with them and what is the buy down costs?
  • August 29 2013
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You're not obligated to that lender and in fact if rates went down by the closing of your escrow and you wanted to jump ship, your current lender would probably negotiate with you to meet that rate to keep you as a customer.
  • August 29 2013
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Profile picture for Blue Nile
As anticipated, rates went up today.



(right click on the images and choose "view image" to see them full size to read the text).

(Bombing of Syria seems to have been put on hold for the time being; at least for a few days to straighten out the "justification" since it would be illegal per international law).
  • August 28 2013
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Sticking it out with your rate and lender is the best plan at this point.  It is also the ethical thing to do.  It sounds as if your lender is working in your best interest.
  • August 28 2013
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You are never legally obligated to any lender.  You also have 3 days after the paperwork is signed to cancel. 

Remember however rates will go up and down in just a matter of minutes and international interests right now can cause immediate increases or decreases in rates on the 10yr treasury.

Depending on how much time you anticipate a new lender to lock a loan in you may have an increase interest rate or decreased.  Right now it is all a gamble, however come debt ceiling debate in September there is a good change that the rates may come down 10-25 basis points.
  • August 28 2013
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Profile picture for user347226404
Thanks for all of the information.  I was lead to believe I needed to lock in for 60 days so now I am sorry I did.  If rates went up I would be glad we had locked in.  I think I will stay where I am.  It is alot of paperwork.
  • August 28 2013
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Make sure and look at what points and fees you are paying in association to that 4.625 and compare it other rates that are much lower and you will likely see higher costs for the lower rates. Rates are truly a guessing game and your best bet may be to just stick with the current rate you have locked as it is guaranteed! Best of luck to you. 
  • August 28 2013
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You are not legally obligated to use the lender who has you locked, but you have a 4.625%... guaranteed. I would continue to closing. Rates might be a little better today but if you go start the process with another lender it could be as long as a month (or longer) until you are locked again. Rates may be even higher by then. 
  • August 28 2013
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Profile picture for Blue Nile

Remember, if you "start over", you are playing roulette with the timing again.  The 10 yr treasury yield this morning is indicating the markets over reacted to the "bomb Syria" announcement the White House made yesterday, and that rates are going back up a bit, later this morning.

Sure, congress' debate over the Federal budget and the debt ceiling after they get back in session in September will temporarily bring the rates down substantially, but do you have time to play roulette with the rates and loan close timing?

If you have a good loan officer and lots of time; you let the officer know your target rate and you let them watch the market for you, and lock you at the appropriate time.  Unfortunately, many loan officers convince people to lock when rates are "high" because they are afraid they are going higher, without looking at the economic indicators.









by the way, the rates have only gone down a bit over 1/8% from recent peak; not 1/2%...
  • August 28 2013
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Just to clarify, if it is a refi, it is 3 days after closing. If it is a purchase, you are legally obligated at closing.
Sorry for the oversight.
Jim
  • August 28 2013
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Profile picture for goodmortgage
You are never legally obligated to a lender until you sign the settlement documents.  What I would normally advise borrowers to do is take another detailed look at your paperwork to determine if there are any penalties expressly written in the loan disclosures.  What kind of application fees and/or appraisal fees have you paid up to this point?  Those are the costs you are usually on the hook for if you choose not to continue the transaction with the lender.  What kind of relationship have you developed with the loan officer?  Have you expressed your concern with them and verified with them if they have a float down policy or are willing to keep your business.  That's not always the most comfortable conversation from either side, but if discussed professionally it could lead to some beneficial results for both you and the current lender.   If the conversation turns into the blame game or strong arming then you'll have to weigh the costs vs. the benefits of jumping ship.  I will say that it's a borrower's market right now so you have some leverage as well.
  • August 28 2013
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You are not legally obligated until 3 days after closing.
However, the rate lock protected you from rate increases as your lender processed your loan. The fact that you locked in shows you had concerns the rate might go higher. Now, your lender while protecting your rate has spent much time and effort (monies!) processing your loan at your agreed upon rate.
It may not be illegal, but it is something...
Perhaps it would be less than honorable to kill the deal now and switch lenders in my opinion. However, it is done quite often. You must think so too, or you would not be asking.
Best wishes, Jim
  • August 28 2013
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Profile picture for daveskow
If rates were now 5.125% (half a point higher ) what would you do ?
  • August 28 2013
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