Usually when I write my column, I share stories of what not to do with respect to your financing. Today is a little different.
This week, I have had the pleasure of working with a most lovely client. Her application is the cleanest and most straightforward file I have seen in several years.
We started her application and her home sold the next day. Several days later she found exactly the new home she was looking for. Everything proceeded according to plan.
The closing date on her purchase is about three months out because the home she’s buying is currently a rental so the tenants need adequate notice.
Part of our conversation, as she was signing off her initial mortgage paperwork, was about the choice of lenders. I sent her application to her current lender because she is happy with them and requested we use them again.
In other columns I’ve shared how not all lenders are created equal. One of the reasons I like this particular lender is because it will continue to reduce her rate should it drop its interest rates.
Lenders have different policies as to how they handle rate reductions. For instance, one lender I work with will only allow one rate reduction and there are no backsies, meaning if rates drop even further, we need to guess when the lowest rate it will offer between now and closing might be. If we ask too early, we are stuck with a potentially higher rate than what is offered currently. If we wait too long, and rates increase, we lose out on a better rate.
Some lenders do a look-back at closing and automatically offer clients the lowest rate from when they approved the mortgage to when the mortgage finalizes. Others are open to multiple requests to reduce the rate.
Unless there is a compelling reason to use the lender that only allows one rate change, I work with other lenders that allow multiple rate changes.
I’m seeing fixed rates trending down right now and I am cautiously optimistic we will see more of this in the spring.
If you are working on a purchase, or have a renewal coming up, one of the questions to ask your mortgage person is how your lender will handle your rate should rates continue to trend down.
That seems like a simple thing but working with the right lender (and mortgage person) may make quite a difference in your bottom line.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.