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If you have locked a rate and rates are dropping, is it possible to obtain lower rate prior to close

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August 19 2009 - US
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"One would think that any "good" broker would be willing to get the best deal available for their client even if it meant the borrower would be required to pay the difference in commission to the broker in order to adjust the rate lock?"  Ah, but the borrower will if lowering the rate will generate a negative profit to the lender.

I understand Eric's perspective because many lenders encourage borrowers to skp out if rates dip by a fraction of a point, instead of educating the borrowers.  Lenders who try to steal business that way are pretty pathetic and don't have much going on concerning steady business.

In the end, the borrower will cut stuck with the cream of the crud instead of a solid professional all due to chasing the best rate by the day.  The best rate of the day might not be so tomorrow.  Better to pick a very good lender who can get a very competitive rate always.
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August 19 2009
Well Answered.
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August 20 2009
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I'm a big fan of your post Gregorio.
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August 20 2009
Mr. Thompson,

No, you didn't understand my point! ... Please look up the word Commitment. ... Thank you, Rudi
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August 20 2009
"One would think that any "good" broker would be willing to get the best deal available for their client even if it meant the borrower would be required to pay the difference in commission to the broker in order to adjust the rate lock?"

You are confused as to what a lock is. When we lock, we lock that days pricing. When you come back a week later and want the current rates, it has nothing to do with commission, it has to do with that days pricing and since you already locked, you cannot get it. If we burn out investors we lose our tiered pricing and it means that all the business we do after you will be at a higher rate to those consumers and we become less competitive. So you don't cost us hundreds, you cost us tens of thousands. And what don't you understand about the term "lock" It's not a partial lock, or a semi lock, it's a lock. When you lock your car can someone get in after by saying pretty please? It's supposed to be locked right? If you want to be able to get the lower rate after you lock, you have to be willing to allow the loan officer to arbitrarily raise your rates whenever they see fit before closing. It's a 2 way street. If you are not prepared to lock, then don't lock, but don't put all the risk for YOUR loan on the lender and loan officer. 

As others have said, there may be a renegotiation policy for extreme rate changes, but this business of breaking locks for 1/8 has got to stop and loan officers need to stop encouraging it. It's real simple to say. Once you lock, it's locked. Period. If someone wants to go elsewhere where they are lied to by someone giving them the song and dance about free float downs ... go for it.
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August 19 2009
Eric,

You are mixing two different professions in two different industries with you post and lumping them together making it an unsound argument.

I agree with you about the Realtors.  I think they simply are overpaid for what they do.  However, there are many honest brokers who work for pennies on the dollar compared to what a Realtor makes on a purchase transaction. 

Add insult to injury, it is the Realtor who asks the broker, come settlement, to pay for fees when the realtor is typically making 4 to 5 times as much.  However, the average borrower never questions such and doesn't realize the 3% fee of the Realtor is costing the borrower thousands of dollars during the duration of he loan because of the increased sales price to cover the commissions of the Realtors.  So, maybe it is the fees of the Realtors that should be scaled down, you think?

If a broker can lower the rate prior to closing then he or she should do so as long as it doesn't create a negative cost factor.  The best thing you can do is talk with a lender/broker and simply ask them what the policy is if rates dip and you want to lower your rate.  Policies differ from investor to investor.  It's not a greed factor to a professional broker who works for his or her client.  Just ask.
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August 19 2009
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To Rudi Hoffman, Yes I understand your point, but for you as a mortgage broker you may be talking about a few hundred to a thousand dollars in commission where the borrower is looking at 10's of thousands of dollars in interest over the life of the loan. One would think that any "good" broker would be willing to get the best deal available for their client even if it meant the borrower would be required to pay the difference in commission to the broker in order to adjust the rate lock?

Maybe I just think like a homeowner who gets tired of everyone trying to get as much money out of my pockets as they can to line their own, example, I buy a home for 100k which increases in value and I sell for 500k why should the real estate agent benefit so much from my investment? Do they work harder for that 4% commission on 500k than if I listed it for 100k?.....simple answer is NO!
Perhaps there should be a standard payment, perhaps an hourly rate with a cap on hours for all brokers agents etc. thus eliminating the greed factor and the feeling that my years of payment on my investment goes to pay for your Aspen ski condo.
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August 19 2009
It may be possible for a fee unless this fee was already incorporated if the lender offered a "float-down" and you broker took it without your knowledge.

Of course, most of us don't enjoy being put in that situation. Most of us feel that if our borrower made a commitment to lock they should honor their commitment. If rates went up, would you expect the lender to honor their lock commitment to you?
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August 19 2009
Yes it is possible.  Ask your lender about their Float Down Policy.
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August 19 2009
 
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