Here is a nice little "trick" or "tip" that might help a bunch of the people that come to these forums. Many of you are probably a little short on obtaining the mortgage that you would like: * Only have 1.5 years on the job * Not enough time from a BK discharge * Don't Quite have the 3% down you may need for a loan. * Moving to a new area and want to have 3-6 months to settle in first. * Have some collections that will fall off of SOL within the year. * Need a few months to get that 50 points on your credit score. * Just put your home up for sale and think it will be a few months. * In the Military and will be transfered within the next year. * Are currently laid off of work for a short time and need to wait. The list goes on. What I have figured out is a POSSIBLE fix to the problem. Not EVERY lender will do this...in fact not but a handful of lenders even have these programs. Let me show you what I am talking about: Code: RATE ADD ON'S: CONVENTIONAL GOV'T DATE DAYS FIXED RATE FIXED RATE 07/26/04 60 .250 .250 08/24/04 90 .250 .250 09/23/04 120 .375 .375 10/25/04 150 .500 .500 11/22/04 180 .500 .500 12/22/04 210 .625 .625 01/21/05 240 .625 .625 02/21/05 270 .875 .875 03/22/05 300 .875 1.000 04/21/05 330 1.000 1.000 05/23/05 360 1.000 1.000 11/17/05 540 1.375 1.500 What you see there is a snipet from a rate sheet (modified so I could put it on the forum board) This is a snipet of what is called a Cap Lock. A Cap Lock is where you have the opportunity to set a Cap (limit, ceiling,maximum, "the highest it can go", etc.) on the rate you will pay on a mortgage. You have the option of Caping a rate for whatever amount of days that you wish and no matter what rates do during that time you are always guranteed that YOUR rate will NEVER be higher then the Capped rate. Within 30 days of you actually closing on the loan you will have the option to HARD LOCK you rate at the Capped rate if rates are the same or higher OR FLoating down (if rates are lower at that time then your Capped rate) to the Current rate. A Couple of examples and how to read the sheet: If the going rate for a 30 year fixed 45 day lock is 6.25% on the day you decide to Cap the rate: You can CAP the rate at 6.5% for 90 days. (add .250% to the 6.25% rate) 6.75 for 180 days.(add .500% to the 6.25% rate) 6.875 for 240 days(add .625% to the 6.25% rate) 7.125% for 300 days 7.25% for 360 days 7.635 for 540 days. I used the 6.25% as a example and of course your base 30 year Fixed Rate Mortgage on a 45 day lock will vary from lender to lender, and depending upon what month that you read this obviously day by day, month by month, etc. You will notice a Slight Variation between the Government(FHA/VA) and the Conventional. There are also programs available for the Adjustable Rate Mortgages (Arms) and Jumbo (over the conforming limits in your area for loan amount) What is needed for this Cap Lock? This may vary from company to company. Some will need a upfront fee of 1%, some will want you to fill out and pay an application fee of say 350 bucks. I can speak of one company that I know that won't charge a upfront fee at all or make you fill out an application. They won't pull credit BUT WILL Cap Lock the loan on your Name and Social Security Number. I suggest asking some lenders about this program on your own and they will let you know how they operate with this type of program. This type of Cap Locking was created for the borrowers that were shopping for a home and were in high or a possibly high volitility market as far as rates are concerned. The "easy low rates" of the last year have spoiled borrowers and lenders and this old rusty tool will probably be more and more popular as the summer is coming to an end. Going back to my original situation you may ask how this affects YOU. Any of you need 6 more months of time to Fix your credit, Get more time on the job, Obtain a few more credit points, Move to a new location, Sell your current home, Save up for the 3% down money, Wait until that development is built, Wait until your local Real Estate market cools down, or Finish reading all of the posts on this mortgage forum? :wink: I have to stress again, there aren't a WHOLE bunch of companies that have this option and some of them do charge a fee for this. There Are some companies that won't charge a thing, won't pull your credit, will not make you fill out an application, and willing to wait for you to get in the position of obtaining a loan. If your loan officer has no clue what I am talking about then have him/her give me a call and I will help them out. If you think you may have a hard time explaining it, print this thread out and take it in to them. If they say that I am crazy, tell them they are right. Hope this helps some people out there (loan officers AND borrowers alike)
