June 11th, 2013 4:29 PM by BILL WILBANKS
Rates have begun to jump in the last 5 to six weeks and at a much accelerated rate in the last 2 weeks. Let's assume you're ready to apply for a loan. When can you expect to lock rate?
If you are considering a mortgage today, whether on a purchase or refinance, you have to get your documentation ducks in a row. Why? Because lenders want to make you a loan. In order to lock your rate and obligate themselves to it for you, they will require a completed application with backup documentation. They need to analyze if you appear to qualify and are serious about moving forward by delivering a complete file. If you don't or can't, why lock a rate? You should know that a lender who locks your rate with their investor is expected to provide the closed loan they lock to the investor and if they fail to do so they must pay a fee for not doing so. It costs them money if you don't close because the investor had to hold that rate on that amount of money for the period of the lock even if the market rate went up later. So a lender wants a complete application package. That's fair, right?
All lenders expect you to be prepared to fully complete a loan application and provide the backup loan documentation such as your income and liquid assets for downpayment or cash reserves among other items to up front in order to lock a rate. They need a complete file to evaluate. That's your "must do" part of the rate lock process. It will reduce the paper chase at the end of today's loan process when you need to close. If you are still trying to get that last document or two a week before you need to close you could very well put your rate lock at risk of expiring and going to prevailing pricing which no one wants to see happen.
Whoever you may apply with for your mortgage, do yourself a huge favor and be ready to provide standard loan documentation up front the day you need to apply to accelerate your ability to lock that rate you are looking for when able. That will be expected and fair to both you and your new lender.