Rates are flat today. Mortgage bonds are trading lower so far today. We have seen some nice gains lately in the last week. Employment is still an issue in our economy. Today’s rates with NO lender fees ARE 4.375% on a 30 year fixed, 3.5 % on a 15 year fixed and 2.625% on a 5/1 ARM (click here to get the details).

Today’s question is from Erica in Michigan. Mike “I am currently in the loan process and getting ready to close. Rates have went down and my lender can’t get me a better rate because I am already locked in.” Do I switch lenders? What do I do?

My answer is in today’s video:

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

I found another great article that gives you 5 more hints to help sell your home. Thanks Trulia!! Great information guys. Check out the video by clicking here.

Erica has a few options. Before you jump ship you should consider what you are actually losing by doing so. Let’s say your refinancing a $200k mortgage at 4.5% on a 30 year loan. This would be a $1013 P & I payment. Lets assume rates dipped 1/8th or .125% and you wanted a rate of 4.375%. That rate sounds better BUT is it? At that rate your P & I would be $998. That is a $15 a month difference in payment. That is $180 a year or $900 in 5 years. I know every bit you can save is great, but what you need to know is that your appraisal most likely will not go from lender to lender. So you would need to get a new appraisal done which could result in a different value and cause a different set of issues. Your new lender may have more strict guidelines as well. An appraisal could be $400 on the first one which you would lose and $400 on the new one. That is a cost of $800 to save $900 over 5 years. Is it worth it? What is your time worth? That up to you.

My point is that .125% of a point in rate is nice but may not be worth it in the long run. Let’s assume you have a larger loan amount and rates dip a half a point. Then obviously there needs to be a discussion with your lender. Most lenders will renegotiate your lock with their investor to get you a better rate in order to keep you as a client. They may negotiate some costs as well. Talk to your lender and find out what there re-lock policy is. Everyone is different.

On a side note, Erica, the rate you locked in 3 weeks ago was a quarter higher than what you could have got with a different lender. That’s a different issue! Call me if you want to discuss it.

It would be awesome if you could help me in my mission to bring transparency to mortgage lending by sharing today’s episode on Facebook or Twitter. Let’s change the way people shop for a mortgage…forever!

See you tomorrow!

– Mike

PS. To ask a question, get advice, or find out what your lender is making off 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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