Rates are flat today. Stocks, oil, and gold are down because of European debt crisis concerns. Today’s rates with no lender fees are 4.25% on a 30 year fixed, 3.5% on a 15 year fixed, and 2.875% on a 5/1 ARM (click here to get the details).

Happy Monday everyone! The bond markets are bouncing back today after comments saying there is no quick fix for European debt problems. We may see a dip in rates or an improvement in pricing today. If you don’t know how the two differ, make sure you watch the Crediting Overages video in the Mortgage Information Tab.

Today I’ll discuss the benefits of getting your mortgage application in processing before locking your loan.

Find out in today’s episode:


(Watch it on your mobile phone or email reader here)

It doesn’t matter if you purchase or refinance, you need to lock your loan at some point in the mortgage transaction. For some of you it will be the very first step, but for others it will happen during the underwriting process. Here’s a look at both options:

Locking your loan first

If you choose to lock first, you know you’re getting the rate that you want and it will make sense for your to refinance. You will also know the lender you locked with had the best deal for you on that day.

However, choosing this option will typically make the loan lock longer because you haven’t completed a full application or submitted any supporting documentation.

You are also locking your loan with unknown information. You are only estimating your appraised value, debt to income ratio (DTI), loan to value ratio (LTV), and combined loan to value ratio (CLTV). This can change during underwriting and change your costs and cause quite the mortgage headache.

Locking your loan during the underwriting process

If you wait until the underwriting process, you are able to lock your loan scenario with all the facts in hand. This allows you to lock with the lender with the best rates and underwriting guidelines for your loan.

Each investor has different underwriting guidelines and overlays that you have to follow. Your loan officer should know those differences inside and out to help you close your loan with fewer headaches.

You are also able to do a shorter lock time if you choose this option. You can get better terms on your loan when you have a shorter lock time, and that will result in lower costs or a better rate.

The only downfall to this option is you are going to have to pay for an appraisal before your loan is locked. This usually isn’t a big deal, because you will need an appraisal eventually.

So when should you lock?

If an eighth of a point in rates determines whether or not you refinance, you might want to lock your loan first. That being said, I prefer locking during the underwriting process. It is easier to get the best deal possible and you won’t be waiting in line like everyone else to wait for rates to dip. You get a head start, and that can be a huge advantage!

If you thought this was good information or worth discussing, help me bring transparency to mortgage lending by sharing today’s episode on Facebook or Twitter.

Let’s change the way people shop for a mortgageā€¦forever!

– Mike

PS. To ask a question, get advice, or find out if you’re getting the best deal possible on your loan, just post a comment below. Daily comparison rates, calculators, and other cool features are available in the free Rates in Motion LoanApp by going to your smart phone and clicking on this link, activation code is 9203780002

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