locked in for higher rate?

fyi - Ive been checking rates lately, and although treasury bond yields have declined big time over the last 3 weeks, lending rates did NOT see a 1:1 relative fall. This tends to happen when either:

a) perceived default risk rises
b) refinance apps exceed capacity

I think its a little of both

I wrote about it last wee: http://www.urbandigs.com/2011/08/chart_of_the_day_10yr_treasury_1.html

"Now, I checked with a lender Ive known for a long time at one of the bigger banks out there and was told...."believe it or not, mortgage rates rose today...". Oh I believe it. When credit risk starts to rise, we should expect mortgage rates to diverge from the trend of 10YR US Treasury rates. Its exactly what happened at the beginning of the credit crisis in late 2007"

Out of curiousity what type of loan are you taking out conforming or jumbo?

Lending rates have declined. And if a bank doesn't want to lower the rate, it's because they'll make more money on the loan. The Dodd Frank law makes it mandatory for mortgage brokers to disclosure how much they're making on the loan, but gives banks a free pass; they don't have to disclose anything.

That said as a mortgage broker with Wells I'm seeing rates of about 4.375%. If this is a purchase, I would ask for a postponement if this broker can't get you a better rate. They think you have no options, so you won't make waves.

esfunding.instantlender.com

I am in a similar situation, also locked at 4.85%, have 1 month till closing, but when I asked about 4.375% rate published on Wells website (conforming, larger loan amount), was told it was lower because included 1% of loan amount towards origination fee + there was extra charge for putting only 15% down.

Tkv - that may be true that your rate is higher based on your down payment percentage. Fact is, if you were a new customer you would probably be able to get a better rate than what you're locked in at with Wells. But it isn't just that simple for the lender to just lower your rate. Remember, you're locked. It wouldn't be fair if the rates went up and the lender came to you and said, we have to increase your rates since they just went up. But with that being said, If they don't lower rates, you can always ask other lenders and see what they are offering. Then you'll have to make the decision on whether the rate being is low enough for you to apply again. Since you have 1 month left, not all lenders will be capable of meeting the closing date. Make sure you choose someone capable. Sunny.hong@bankofamerica.com

Is there a commitment fee on the loan? If so, it is much harder to negotiate. If you do not have a commitment fee, being locked in does not matter if you want to walk away. Remember you can delay the closing by 1 month without any penalties. There are many banks out there who can close in less than 45 days. In fact, they may not give you a commitment longer than 45 days. Mention this your bank and they are likely to meet you some discount. However, do not expect the best. The banks have to make some money too.

Sorry for the typos:
Is there a commitment fee on the loan? If so, it is much harder to negotiate. If you do not have a commitment fee, being locked in does not matter if you want to walk away. Remember you can delay the closing by 1 month without any penalties. There are many banks out there who can close in less than 45 days. In fact, they may not give you a commitment longer than 45 days. Mention this to your bank and they are likely to give you some discount. However, do not expect the best. The banks have to make some money too. Try a mortgage broker who will know some credit unions offering very good rates if your financials are strong and the downpayment is more than 25%.

When I got my mortgage, I was able to do a one time rate adjustment during the lock period, and then after closing, I was able to pay a small fee to have the rate adjusted again. I guess you have to pick the right lender.

Don't sweat the small stuff. The low rates you see advertised are generally come-ons and you rarely get the rock bottom rate. Unless you are talking about a several million $ loan, it won't make much difference in your payment and besides the little extra you are paying in interest is tax deductible.

Enjoy your new home.

"Don't sweat the small stuff. The low rates you see advertised are generally come-ons and you rarely get the rock bottom rate"

I agree with this..besides, every buying situation is different - i.e., credit, down payment amount, paying points, quality of bldg (owner/occ ratio), etc.. can all affect the final rate. Usually the one advertised is the absolute lowest rate on the table that can be had only if all items work perfectly in your favor

If you go to bankrate.com and click on the tiny icon of a bar chart in the top-right area off the front page, you can see where average mortgage rates have been historically. Compared to 1 month ago, 30yr fixed is down 0.2 to 0.3%, and the 30yr jumbo is down 0.1%. The 0.8% or so drop we've seen in 10yr and 30yr treasuries hasn't really made it into mortgages it would seem. So, the broker's statement seems accurate if you're in a jumbo, which from the rate you quoted seems to be the case.

Why don't you just get a quote from another broker? That'd definitively answer your doubts.

Ask for a written statement of current rates if you think you are being lied to.

http://www.mortgagenewsdaily.com/08172011_mba_applications_survey.asp

Ill write about this in a few days..right there: Fratantoni continued, "Refinance application volume increased substantially for the week, although there was substantial variation across the market. In September MBA's Weekly Applications Survey will transition to an expanded sample that covers 75% of the retail market rather than the current sample that covers roughly 50% of the retail market. That expanded sample showed a significantly larger increase in refinance applications than the current sample, with some lenders reporting increases in refinance applications in excess of 50 percent for the week. The big differences in refinance volumes were likely driven by the decisions of some lenders not to drop rates last week, largely due to the need to manage their pipelines."

As I said originally, its likely due to combination of rising credit risks + refinancing apps exceeding capacity.

I locked in at 4.625% for a jumbo 3--year through Wells Fargo on Thursday of last week. No points.

10YR Treasury yields were at 3.35% when I locked in my 10YR ARM at 4.125% back in late April. Now 10YR yields are at 2.07%, and the same 10YR ARM product is now 3.625%. So 128 bps drop in 10yr yields resulted in a 50 bps drop in yield for this loan product. It would have cost me about $3,400 to do the refinance with all bank fees.

During the turbulent market conditions, you would not see the mortgage rates come down as much as the treasury rates as the banks' funding cost goes up and credit spreads on mortgages go up. This is no different from other financial assets where the investors want higher reward to take the risk.

Thanks everybody for the swift response. Been a busy weekend so I haven't had time to read all of this.

Mikev: conforming loan

Shong: my broker does 2 week locks, so I'm not telling her to just lower the rate in the middle of the lock. rather, I requested her to just let the lock run out and for her to lock me in at the current market rate. I requested that 3 times probably during the last month and half?. she told me twice that the rates haven't changed for her. and, the last time, she actually said that her rates have actually gone back up (after going down the week before) so that I'd be getting the same rate even if I let the current 2 week lock expire. So, its not like Im telling her to change the rate in the middle of the lock. And, vice versa, if the rates went up in the middle of the lock for me, tough cookies for her.

300: yes, committment fee. I've thought about walking away from it just out of spite! LOL. esp with the knowledge that we have that 1 month delay in closing. But, I think she suckered me in by repeatedly telling me that we'd be able to close next week, and then the week after that, ect. So, it's been like this for a month or so where we kept expecting her to ok us for closing, and us reluctant to walk away bc the closing "might" be next week. oh well. live and learn.

RENY: yes, thanks. you're right that the amount really adds up to only a few bucks a month extra. That's the other reason why we didn't just go for another banker. The rates are still very reasonable regardless. I just didn't want to be taken for a half a percent, which could be a big deal in the future (I started this thread in hopes of saving a few extra bucks in the future in case we buy again).

urban: thanks, not feeling so bad now that we've actually got a date to close (tomorrow!). not like the last few weeks where she kept telling us "it's def this week!" or "it's def next week!"

ionada: same as above. we just wanted to get it over with and kept hoping that her words were true. that and other reasons I mentioned prevented me from getting another quote.

So, I guess that was the tactic to keep me in line then: the promises to close next week or later this week, etc. anyone?

thanks again

jaesee: point taken. I hope the 2 week locks was your choice and not just her gambling with rates. But since youre closing tomorrow, I guess there isnt much choice. Best of luck. sunny.hong@bankofamerica.com

jaesee: point taken. I hope the 2 week locks was your choice and not just her gambling with rates. But since youre closing tomorrow, I guess there isnt much choice. Best of luck. sunny.hong@bankofamerica.com

surprise, surprise! no closing! hahahaha. needless to say, i had a few choice words for the lender. the rest of the story is way too funny/f'ed up to tell right now. ok, maybe just a hint: seller got wind of it. and, lenders got theirs, amazingly enough. after all the delays, i couldn't believe how swiftly justice was served. i will buy from this seller again in the future if given another chance. right now, we have a new lender, with a more than half % lower rate. here's hoping for the best.

shong: 2 week lock was her company thing. we would've liked a 30 day, but did not feel threatened by the 2 week given the way rates were going. looking back we were right of course. like i said, we kept asking her to let the 2 weeks expire so we could lock in at lower rates.

everybody else: thanks for the advice/opinions. i read you guys all the time. it's been a learning as well as an entertaining experience. maybe i'll dish all the dirt once this is safely behind me. peace out.

thanks to you too shong. i didn't mean to exclude you from there.
When I grow up, I want to be just like some of you here. just some of you.;)

I think that you can get 4.375 from your broker. We just closed on a place at that rate with Bank of America.

http://www.astoriafederal.com/html/rate/mort.jsp

Get 4.25% with no points or you are getting ripped off. Delay your close and get a loan from another bank. Using a broker, BTW, is dumb. Go direct.

amuz: got lower than that ;) Using my old banker.

Pawn: And, yes, I'm going direct next time. I just thought that the "preferred lender" would get me to closing sooner/more efficiently, thinking "how much difference in rate could there be?" .25% at most? Wrong! on both!

The sponsor wants to sell to me. I want to buy from him. We worked out a contract amicably. Who knew there'd be so many middlemen getting in the way? (

Using a good broker is the smartest way to go. A broker can get you the best deal from a pool of banks.

A good broker will not charge upfront fees like an application or credit report fee.

A good broker will lock in the rate for you and if the rate goes down,will lower the rate.

A good broker is experienced and can impart his knowledge to you and simplify the process.

A good broker gives you personlized service, and doesn't desert you once they think you're locked into the loan. They return your calls promptly.

Enough said.

www.esfunding.instantlender.com

for a conforming loan you do not need a broker.

using my broker was the dumbest way to go. my broker got me the worst deal from her bank

my broker charged an application adn credit report fee

my broker locked in my rate and didn't let go when the rates started dropping, even though she only did 2 week locks that she could've let expire.

My broker did not seem experienced in hindsight and did not share any information much less impart her knowledge to me, and def did not simplify the process since it's been over 4 months and we still haven't closed

My broker never returned phone calls. I always made the calls to her, even on closing day, only to find out 4 hours before closing that she couldn't close.

enough said. i picked a crappy broker. but, i'm glad i went back to my old banker. hopefully he'll come through. there will be much written of this firm and this broker once everything's done.

Mortgage brokers are useless. I had a relative who was a mortgage broker ask me for a $20,000 fee to facilitate my conforming loan. He must have thought I was a complete idiot - this type of treatment is prevalent in the mortgage broking world.