Real Estate Info & FAQ

Getting the best rate

A lot of the national lenders now allow us, as the brokers, to renegotiate a rate in order to keep a deal "in house". IN the past, this was not the case.

The way that it used to work is this. If the client was real sensitive to the rate, we would lock the loan with one lender and if the market changed for the better, we could actually close it with a different lender at the lower rate. This is sort of a "hedging" effect. Of course, this could not be abused because lenders did track the ratio of locks to closed-loans, and if you had too poor of a ratio, they would delete your account. In addition, the unscrupulous mortgage brokers will still charge the borrower the same rate and move it to another lender and make more money on the back end of the loan for selling the customer on a higher rate.

Now, we have the ability to lock a loan and if the market gets better, the lender we locked with will "renegotiate" the rate down to the new, lower rate. For example, if we locked the loan at 6.25% for 45 days, but as it gets closer to the closing, the market rate is 5.875%, the lender will now move the rate down to either 5.875, or at least 6%.

What are the advantages to this? The customer gets the market rate at or near the time of their closing, plus protection from a rising market. The lender gets to keep a loan that they otherwise would have lost. The mortgage broker gets to keep a loan processing through a particular lender. As mortgage brokers, we develop good relationships with particular lenders and we learn how they work. This is important in being able to deliver on the intangibles of speed and ease-closing.

Labels: Buyers, Interest Rates

posted by jkballentine @ 9:30 AM