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When can you "lock-in" an interest rate?

When can you actually "lock in" an interest rate? The story has changed a few times with my lender in Las Vegas... but I really have no idea which way is up now. Do you lock in before you find the house you want? After you sign papers? Before or after it goes to under-writing? Also... is it true that its a higher interest rate for "flipped" houses? Sadly I have no faith in my current lender, but feel that I'm stuck with him since I'm so far into the process. However, if I find that there are still more mistruths than facts being given to me, I'm not sure what to do.
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January 21 2011 - Las Vegas
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If the max rate lock is capped at 60 days, lock after you go under contract and submit your income/asset information to the bank.  You have a small window to close and 60 days goes fast.  Don't lock to early and face rate lock extension fees.  Hope that helps!!!
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July 01 2013
You can lock in an interest rate once you have a property for the loan application. 
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July 01 2013
You can't actually lock in n interest rate. You must request that either a broker or Lender lock a rate for you. When a rate is locked, the clock begins running. Which means that you must be able to close the loan prior to your lock period expiring.

Therefore you would not want to lock until you can see a clear timeline for closing your purchase. when you do lock you will want to lock with some extra time, say 10 days more than you expect you'll need. Just in case sometime unforseen developes. 

If you haven't found a home to purchase, then you are not really very deep into the process. You could certainly interview other lenders and begin a new application if you find someone with whom you are comfortable.
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January 22 2011
there are no LLPA's for flipped houses; all purchase loans adjustments are for down payment, property type, occupancy and credit score. period. 

 In this case I assume you mean the seller is flipping the house.
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January 22 2011
You can lock in the interest rate anytime after you are preapproved.  Generally you want to wait until you are under contract to lock your rate.  I do not believe the rate should be higher because it is a flipped house assuming you are speaking of an owner occupied single family residence. Hope that helps.

Thanks - Matt
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January 22 2011
Lenders have different guidelines as when a rate may be locked. So, it's lender specific. Although, you would be foolish to lock before you find a property and also know how long  of a escrow the seller wants.

The rate is not higher. Although, property flipping is also lender specific. Some will require that the seller may only earn X amount of percentage from what the seller purchased the property. They'll require to see the original HUD-1.

You haven't submitted a purchase offer yet. You have time to find someone else you can trust. It wouldn't harm you to become at least a little more educated about the mortgage process. Even though I only originate loans in California. You still may visit my website to learn some more on-line.

Happy funding, Rudi
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January 22 2011
It is unfortunate that you are dealing with a lot of frustration during your loan process. It is typical to be able to lock a rate in when you have ratified a contract on a property. 30,45,60 and even longer lock periods are available, and rate is lowest for 30 day lock. If you have a valid sales contract on a property I would expect that you would be able to lock in the rate.
Your second question about "flipped" houses I assume is about rate on a property that is being flipped by current seller not you buying and flipping house. If that is true then there should not be an increase in the rate, though there may be a concern about the property meeting anti flipping guidelines.
Business should be earned and a consumer should not be relegated to being involved in a situation of distrust and frustration. The bigger issue is yet to come and that is the lock in, Disclosure and Good Faith Estimate, loan approval, and closing process and explanation.  If there is a Realtor involved it is time to get them involved to be your "go between". Even then it may be time to reconsider your relationship as your frustration level will only increase.............getting"stuck" is never good and there are many loan officers available  that earn trust and respect on every loan they originate.
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January 22 2011
Hello Enflyt,

Your loyalty is commendable, but keep in mind that you are making a decision to work with someone whom you do not trust and if they are not to be trusted, it could well affect your loan payment for the next 30 years.  you have a right to expect straight answers and to either trust your Lender, or switch.  Remember you are the client, not the other way around.  so, my suggestion is that you go to your Lender, ask to speak with his/her Manager and voice your concerns.  If you are dealing with one of the more well known Lenders, you should be able to feel a bit more confident that you are being dealt with fairly and honestly, but if you don't feel that way, do what you gut tells you to do - do what is in your best interest.

Now, on to your questions.  I am not a Lender, but I am a Real Estate Broker/Salesman with more than 31 years experience.  So, let me share with you what I know from experience.

Lets start with this first Factoid:  Most all Lenders go fishing in the same pond for their money.  Meaning, there are pols of money out there in funds, and those funds offer to loan from their fund at a certain rate or more particularly, a certain yield.  With that in mind, generally, and depending on the Lender, you can lock in the rate within 2 weeks of the anticipated closing date.  In doing this, the Lender (investor) is looking into the future (2 weeks in this case) and prognosticating what they anticipate the rate to be at that date.  If you lock earlier than that, the Lender (read that Investor) has a tendency to hedge against an increase by quoting a slightly higher rate.  You may be able to lock the current rate for an extended period of time by paying a "Lock fee". 

If your Lender is a Mortgage Broker, which means he/she does not originate the loan (which is pretty much the way it is with all Lenders these days), but is shopping the loan, they will be at the mercy (read that policies) of whoever they are brokering the loan to.  It would be impossible to lock the rate prior to finding a home, because a lock cannot have an open ended termination date.  Rates have been fairly stable, but there has been a bit of (and I use this term loosely) volatility in the rates (1/8% here, 1/4% there), with a current concern that they will go up, so again, locks are generally shorter, and if they expire, getting a rate extended when the then current rate has gone up will l cost you money (if it is possible to extend at all) to the extent of 1/4 point or so.

With regard to your question about higher rates for flipped houses, that depends on whether you are speaking in past tense, or future tense.  If you are clearly planning on flipping the property (we are speaking in future tense), it means that the lender is not going to get the benefit of collecting interest for a typical period of time, or collect a service release fee (which is collected when they sell the servicing of your loan to someone else) before you pay it off.  So they may charge a bit higher rate, or higher front end closing costs.  If you are buying a home that is being flipped to you (past tense), there is no reason to bump the rate to you.

Before I close, I need to share one last thought.  And that is this:  Closing costs and interest rates are inseparably connected.  All Lenders have a yield that they need to get on every loan they make, and that yield is generally the same from one lender to another.  One Lender might offer you a lower interest rate, but the closing costs will be higher.  Another may offer you lower closing costs, but the interest rate will be higher. 

Remember, it is all about yield.  Up front closing costs represent sort of a prepaid interest, thereby increasing the yield.  Others might (in my mind) cheat a bit by quoting you a higher interest rate and then getting what is called a "Yield Spread Premium", or "Rebate" for selling you a higher than market rate. To me, this hardly seems fair, because it is a back door charge that you only see at the closing table on the settlement statement.  I have ended relationships with Loan brokers who got a giant rebate for hitting you with a (unbeknownst to you) higher rate.

So, Last thought... If you are totally unhappy with your Lender, you have the right to ask for the file (and receive it) and to walk it down the street to another Lender that you feel will deal with you honestly and fairly.  I have done this before.  It is done all the time, so you  needn't feel guilty or obligatged.  This is YOUR money.  If you need a suggestion, let me know.  I will be more than happy to give you a few suggestions...keeping in mind that I do not gain from those suggestions, so hopefully you can trust my advise.

Best of luck, and thanks for reading.
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January 21 2011
 
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