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Lock-in fee

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Icon Mini Profile xmljar





Joined: 08 Apr 2007

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Post Posted: Tue May 08, 2007 1:42 pm    Post subject: Lock-in fee
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hi all,

i have a pre-approval from a bank and they are asking me they can lock-in the rate, but they require a 1% of the total loan as a deposit. they say its refundable if something goes wrong, like inspection etc...

is this legal? do banks do tht?

vik
Lowenkron

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Post Posted: Tue May 08, 2007 2:00 pm    Post subject:
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Yes, lock ins are done by banks, it helps you if the rates are going to rise further before your closing. You will be assured that the loan will have a rate lower than prevailing rate if the lock in rate happens to be lower.


Lowenkron
Icon Mini Profile miller_st
miller_st




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Post Posted: Tue May 08, 2007 2:18 pm    Post subject:
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Hi Xmljar,

There can be various options with rate lock ins like rate locks with locked in points or rate locks with floating points. Go through this page ( http://www.mortgagefit.com/lock-in.html ) for more information about Rate Locks and the various options that can be used with lock ins.

Miller
Icon Mini Profile jerry
jerry
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Post Posted: Wed May 09, 2007 2:24 am    Post subject: RE: lock-in fee
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Hi Xmljar,

Welcome to the forums.

The lock-in fee may or may not be refundable when you withdraw your loan application or in case credit is denied to you.

Thanks,
Jerry.
Icon Mini Profile kenstampe
kenstampe
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Post Posted: Wed May 09, 2007 10:45 pm    Post subject:
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1%? For how long are you locking in the rate?

Typically an interest rate lock can be done for 60 or 90 days with no fee. Lenders may charge a lock-in fee for longer term locks. From my experience a 1% lock in fee would be required on a 180 day lock and not all of the 1% is applied to the closing costs. The up-front fees are rarely refundable, mostly they allow the 1% to go towards closing costs as long as you close on time.
marseille

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Post Posted: Thu May 10, 2007 5:51 pm    Post subject:
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Quote:
hi all,

i have a pre-approval from a bank and they are asking me they can lock-in the rate, but they require a 1% of the total loan as a deposit. they say its refundable if something goes wrong, like inspection etc...

is this legal? do banks do tht?

vik


This federal reserve page has very good information about rate locks, I think you should have a look at it: http://www.federalreserve.gov/pubs/lockins/default.htm


Marseille
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