Typically, you cannot “unlock” a locked mortgage. Your LO may be able to break the lock and lock with another bank if they work for a mortgage broker or correspondent lender. Many LOs prefer not to to do this as it burns our relationships with the lender. I will re-lock a loan if rates have changed significantly but I limit it to one time during the transaction. No LO wants to lose a loan they’ve invested their time with. LOs are not paid unless the loan closes. Which I know you’re not asking about nor may you care.

A rate lock is a commitment to the lender and there may be repercussions to the originating mortgage company if they have a high volume of fallout (loans that have been locked but not “delivered”).

Did a little checking, and from a Sale Failed standpoint, there does not seem to be a change, based on some data.

In the MLS we can’t easily track why properties come back on market that are STI or pending. But there is a “sale fail release” status.

In 2005 there were 555 sales failed and released in King County. In 2006 there were 456 and YTD there are 417. Doesn’t seem like a strong trend of it being worse in 2007 so far. We’ll see where it lands by year end, butt looks like likely more than in 2006, but not necessarily more than in 2005.

This year Auburn had 42 of those with 743 sold. Kent had 43 with 998 sold. Bellevue had 38 with 1,195 sold and Seattle had 100 with 6,478 sold. Federal Way had 22 with 704 sold. That is counting both residentail and condo sales.

To check zero downs agains sales with money down, I have to peek inside each and every sale. Much more tedious. I’ll try to do that with these same subsegments at the end of October. I can’t do all of Seattle. But I’ll hit the other segments and see if sale failed and zero down has similar proportions per city using sold in October as the guide.

With Step 1) make sure the reputable brokers will guarantee their closing costs as shown in section 800 of the GFE.

Step 3.5) tell your LO that you would like to review your HUD 24 biz. hours prior to your signing appointment. This is when you can match up your GFE to the HUD and contact the LO if there are errors.

Step 3.75) at the signing appointment, don’t hesitate to contact the LO if there are errors or issues that you discover.

The answer to your final question: you cannot “unlock” rates. You can opt for a “float down” at the time of locking in your interest rate. Rates with a float down feature are often slightly higher than the going rate.

Rates are priced at the time of locking. The example that I gave on my blog is based on the same rate with different lengths of time.

It could be at 30 days prior to closing, assuming you locked, that rates are slightly higher than when you locked.

Also, it’s 0.125 basis points in my example. The example is not a hard and fast rule for pricing. That’s just what it was back when I wrote that post with one of the lenders we work with.

Thanks for the information about the rate lock on your blog. It was a very clear explanation, but I wanted to get into a little more detail. As I understand it, you’re recommending the following:

Step 1.) Get pre-approved for a mortgage, ideally with AUS findings (or manual underwrite for more special circumstances). Assuming I’m shopping around, I should be able to compare GFE’s from several reputable lenders/brokers.

Step 2.) Identify property to purchase and get an accepted purchase agreement.

Step 3.) Call up loan officer, provide purchase agreement and request a rate lock in writing (assumes escrow closes within 30 days). I probably should not pay a premium for a 30 day lock period.

Step 4.) Close the loan, get final settlement statement/HUD-1 and hope for no surprises at closing table.

Does this sound right?

One final question: your blog article gave the example of a 15 day lock that was priced 125 basis points lower than par pricing. If I’m well into my escrow period, and rates haven’t changed can I ‘unlock’ my 30 day rate, and capture the 125 basis point premium?

Thanks,
LAXTOSNOCO

When to lock is up to the borrower. I prefer locking sooner than later if the borrower is happy with the rate. I’m not a gambler and in this market, locking in rates and having loans fully approved can save a borrower a lot of grief if the program is being discontinued or the underwriting guideline has been modifed.

For more info on locking, you can check out a post I did earlier here.