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New Loan Rules Raising Costs

By October 14, 2015

The Washington Post digs into the new loan rules and finds that loan costs are raising because longer rate locks are required:

Why? Because most clients are opting for longer rate-lock periods, and those longer locks cost more money. Typical rate locks guarantee borrowers that they will pay no higher rate than what is stated in the loan quote. They can run anywhere from 15 to 60 days or more, and involve capital-market hedges by the lender to obtain the rate guarantee.

Tyler’s standard rate lock used to be 30 days, but now clients need at least 45 days. That can add an extra $500 onto her quotes for average-size loan requests, she told me, depending on market conditions and the bank or investor she’s using to fund the mortgage.