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Should a written extension be offered if bank needs beyond 90 day lock to arrange closing?

  • January 05 2011 - Pomfret
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Answers (4)

Shelly,

Normally a loan originator would let you know the anticipated closing date. Then you could choose when to lock and for how long.

The longer the lock, the higher the fee. But, a higher fee for a longer lock may not be as expensive as a rate lock extension.

To my knowledge every loan originator would make you aware that you lock was about to expire and offer you an extension. I cannot imagine your 90 day lock expired without an extension being offered.

Is this a REO or short sale purchase or new construction? If not, something is wrong. It shouldn't take longer than 30 to 45 days to close a normal purchase or refinance, regardless of lender chosen.

Happy funding, Rudi
  • January 05 2011
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Hello,
Initial lock policies, and lock extension policies, will vary from lender to lender. The good news is all lenders in general offer lock extensions in one form or another. Some can be free (if lender was at fault for delay-your loan officer should be able to make an internal request) some are market based (worse case scenario) and most are fee based (.30-50bps on average). 

If you were told your lock could not be extended and needed to be re-locked at current market rates there may have been some form of mismanagement on the lender/broker's part in which case you may be forced to consider other actions.
  • January 05 2011
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If they need more than 90 days you may want to find another bank. 
  • January 05 2011
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Hi shellyrena,  A written agreement is always preferable.  However, great care should be used.  You might ask your REALTOR to take care of that for you or ask your attorney. 

Because of the implications, unless you are an attorney, you should not draft your own agreement.

Good Luck!!
  • January 05 2011
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