Debbie Bloyd is a contributing author to Weekly Real Estate News and can be contacted at 469-768-0337 or [email protected]
What does locking a rate do for clients? It keeps these rates in check. Some lenders that I use even let me lock and shop. What does that do? It lets the borrowers lock a rate in a rate for up to 90 days and then continue to shop for their homes. Why is this so important now? Rates are going up faster and faster and by the time some clients find a home and get an offer accepted, their rate is so high that they are out of the price range and can no longer afford a home at that price.
Is this real? Yes – story time…. A client has been trying to buy a for sale by owner home without the help of an agent or anyone. It was from a family member. The house needed repair, and I guess no one thought of that when putting the deal together. Without representation, both buyers and sellers can get caught in this trap. The house was a mess – but that is what everyone was used to, so no one cared. The appraisal was a wreck of issues and problems and unfinished rooms that no one cared about. The problem was that now that they had to fix those things before the appraiser could come back out, and since they did only a 30-day lock – the first lock expired – they could not pay to money to extend it and had to take the higher market rate that was a point higher. Higher rates impact both buyers and sellers in this case. To have kept the same price it would have cost him several thousand dollars that he did not have. So he is now buying at a higher rate and not happy. This could have been avoided if they had a longer lock.
I have another client that did the rate lock for 90 days and she was worried her rate would expire as well. And it was a great rate at 4.25% for 30 years. Now, without that lock, her rate would be at 5.5% – a big difference at $500,000 loan amount. She had lost over 22 offers and was scared that she would never get an offer accepted. Luckily, she did and will close 1 day before the lock expires.
This locking the rate is serious business, so please let your clients know that this does change the value of the house that they are looking to purchase. The Fed continues to try and regulate our economy and we are told by industry experts rates are continuing to climb .50 basis points on Wednesday. Rates are expected to end the year if this keeps up at near 7%.
Protect your clients and their buying power – LOCK THOSE RATES NOW!!!!!
This article is an overview for a general educational purpose only. The information presented should not be relied upon without the advice of counsel.
Debbie Bloyd is a contributing author to Weekly Real Estate News. She can be contacted at 469-768-0337 or [email protected]
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