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Mortgage Interest Rate Lock In

Mortgage Library: Ask a Mortgage Related Question: Answers: Mortgage Interest Rate Lock In

Question:

I am going to a mortgage broker for my home mortgage loan. I received and signed my Good Faith Estimate (GFE) provided to me by the mortgage broker. The GFE included estimated closing costs, my mortgage lock in rate (7.9%) and my monthly mortgage payment.

When I received the GFE from the actual lender the mortgage rate on their form was 11.9% with my mortgage payment $300 higher than the GFE I signed with my broker.

According to my broker the lender's GFE was incorrect. She contacted the lender and they say it was a mistake and they're not sure how it happened. I was reassured by both the lender and my broker my interest rate is 7.9% as originally quoted.

I'm still worred about proceeding to closing with the possibility of the interest rate not being corrected.

Does the interest rate I locked in with my broker have to be honored by the lender? Do I have any recourse with my broker if I proceed to closing and the interest rate is not changed and I fail to close?

T. W.
Tulsa
Oklahoma

Answer:

T.,

I've seen that happen more than once. When a broker sends your application to a lender, the lender is required to send you certain disclosures, including the Truth-in-Lending (TIL). Often the TIL and/or GFE is not correct. Usually this is because the lender knows the TIL and/or GFE is a working copy and they aren't too concerned with the accuracy at this point--you will sign the true and final documents at closing.

I would assume your broker actually did lock the interest rate you were quoted. Unless you have other reason to believe your broker is being less than honest with you, everything is probably going to be fine.

What recourse do you have if at closing the interest rate or closing costs are significantly different? Unfortunately not much. You can always refuse to sign, walk away, and find another broker. Of course with a purchase you risk breaking the option period and losing the house. You can always report broker ethics violations to your state's mortgage licensing governing body, but it would be after the fact.

Feel free to call or email me if I can be of further help.

Rick Lanicek
Mercantile Mortgage Corp
17950 Preston Rd Ste 50
Dallas, TX 75252-5657
(972) 705-9721
(800) 256-0817 Ext 202
Mobile (214) 552-6125
eFax (972) 692-7260


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