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Rate Changes in the Last Two Weeks

We've been approved for a conventional loan refinance (>$417k, 74% LTV,  great credit scores).

Our loan officer locked in a 4.75% "no cost" rate on September 3 (unbeknownst to us).  Without a warning, and after delayed responses on our request for updates, he told us we needed to sign today in order to close our FHA loan by the end of the month.  He also said that the bank is giving us a 0.3% rebate towards closing costs.  I countered this by saying our rebate should be closer to 1%, purely based on rate sheets differences from 9/17 to today (9/23).

After talking to him on the phone, he said that banks don't always share the full downside and that he 'doesn't typically tell his clients about these rebates'.  I know all about rebates and feel like he should have kept us in the loop and been honest about the rebates and why we didn't get the full benefit of the nice drop we've seen in the last week.

In addition to this, he says we will need to now pay a 0.5% fee when we re-lock and refinance at the end of October.  Are we responsible for this if we change banks?  Am I crazy for thinking our loan officer led us down a bad path and didn't keep us updated, hoping we didn't know what the real rates are??  I'm not a fan of loan officers using the "end of the month deadline" to force a signature.
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September 23 2013 - US
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Answers (12)

Profile picture for cuencap
So do those numbers look decent?  How can we avoid paying the 0.5% penalty from our last refi that fell through?  We really don't feel we should be responsible for that...
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October 09 2013
Profile picture for cuencap
From our original GFE (4.75% rate locked on 9/3): Origination charge: $1490 Credit for specific rate (4.75%): $0 Adjusted origination charge: $1490 After the payoff and other charges, our total closing (without setting up an escrow account) was going to be $5000. We don't have the new estimate for the 4.5% rate yet.
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October 04 2013
No problem, it's the same thing. Are you getting a rate of 4.5% and a credit to pay Closing Costs? I see 2 different statements below: ( what is the adjusted origination figure on your GFE / 4.5% offer?)

  "  I feel like we should be getting a much better rate than 4.5% with no costs"



"With the lender we are approved at, the rate has dropped to 4.500% with no credit which is great. This includes the 0.500 penalty for not taking the original lock as we talked about before.
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October 04 2013
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Lender credit...that's what I meant.
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October 04 2013
There is no set rebate, pricing is different from each Lender. In your case you are getting a High Balance Conforming Loan, some Lenders could pay your Closing Costs at 4.5% with a Lender Credit, some at 4.375%, and maybe a couple at 4.25%.
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October 04 2013
Profile picture for cuencap
Could someone tell me what the rebate is today (or yesterday) on a 4.5% rate from Freddie Mac direct? High balance loan, 74% LTV, 765 credit. Thanks
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October 04 2013
I would say it depends on the lender. If they are a broker, then they can promise you the world but then they have to actually find the rate through the list of lenders they have versus going through a direct lender such as myself that can lock you in right away. I always wait till the intial signed disclosures are back along with the intial supporting documents and then I lock in the rate. I don't play the market and float the rate.

As far as getting a better rate/cost, you can't negotiate your rate and cost. We go by set rate sheets and what you qualify for depends on the credit, area of property, LTV etc. The national average doesn't mean everyone qualifies for it and the rate sheets for one lender will be different for the next.  There might be some things lenders could drop such as appraisal fee, origination fee but your not buying a car so we have no control over the rate sheets and can't just change them or "price match". I wish I could so I didn't lose any deals! some mom and pop lenders work off of thin margins so they offer lower rates but the experience and/or service is usual not as good versus going through a more reputable national lender ( and no I don't mean BOA or Wells because they are awful when it comes to customer service and experience) . And no you are not responsing for re-lock fees only appraisal if it has been completed.

I am honest and upfront with my borrowers and would not force someone to sign so I can make my quota for the month. That's honestly the reason why. We are salespeople keep in mind. Some are just more honest and up front than others.

Rates have improved slightly and I think the national average is now around 4.5 / 4.625. So you could shop around but you should also consider the turn around time and quality of service you will get not just the rate.

Hope this helped and Good luck!
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October 04 2013
Profile picture for cuencap
Conventional loan, details are above. We didn't go through with the refi last month because our loan officer locked without our knowledge on 9/3/2013...before having any of our information or appraisal. During the month of September, rates dropped a bunch and, thinking we hadn't locked yet, thought we could get either a better rate or a larger rebate. So now, comparing rates/rebates from today to 9/3, I feel like we should be getting a much better rate than 4.5% with no costs than 4.75% without costs on 9/3. Do you agree?
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October 03 2013
Is this a conventional loan or a FHA loan.  IT would seem that you are doing a conventional loan but you did mention FHA one time. You are not going to have to pay the penalty for the blown lock but you may be subject to a new appraisal.  4.5% with no cost on a conventional loan depending on your location is not that bad of a deal.  However, why did this loan not close in the first place.  If they can not close the deal then it does not matter what the rate is.
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October 03 2013
Profile picture for cuencap
Here we are, a few weeks later and our loan officer is still quoting 4.5% interest rate (conventional loan, high balance).  He's quoting a no cost loan even after our 0.5% penalty for not going through with our loan last month.

The rates have dropped more than 0.25% since September 1, right??

Here's his verbage:
"With the lender we are approved at, the rate has dropped to 4.500% with no credit which is great. This includes the 0.500 penalty for not taking the original lock as we talked about before. No way to get around it. This is a strong position."

If we go to another lender, will our original appraisal be valid, and will we be able to get rid of the 0.5% penalty!?  I don't feel comfortable that he's saying the rates have only dropped a small amount when I am looking at other rate sheets that have shown a much larger drop...

Thanks!
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October 03 2013
As Justin mentioned, the end of the month issue could very well be legitimate as FHA payoffs are unique.

My one huge concern is that you did not know when or what you were locking at. You should have been the one to choose when the rate was locked and you most certainly should have known what you were locking at. It sounds like the lack of communication in general was poor.

Had you actually chosen to lock in, the rest of what your loan officer is saying makes sense. When you lock your loan, you are locking the pricing in, for better or worse. It is not a given that if rates drop, your lender automatically gives you the best available. Some lenders will do this as a courtesy, others will meet halfway and others will not budge. 

You are not responsible for any lock extension fees should you decide to choose another lender, nor are you required to close with a lender because you applied. You may have to spend money to get a new appraisal and credit report with a new lender, it just depends on what you have paid for upfront and/or whether the appraisal can be transferred in a timely manner.

I hope it all works out for you!
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September 24 2013
If you are paying off an existing FHA loan then there is a valid end of month issue where the payoff requires full month of interest whether it is paid on the 2nd or 30th of the month. If you miss the monthly cycle you could end up paying duplicate interest over extended period. As to the rest of your post, there are several red flags. Most notably if your loan was locked you should been provided an updated locked estimate to reflect your rebate and expiration date. With market having improved and all indications of dishonest or incompetent originator, it would be sensible to look elsewhere and highly unusual if you were on the hook for any extension fees.
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September 23 2013
 
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