I’m going to have to sell our house due to an impending divorce. My wife wants to use a realtor, I do not, because I have the time and wherewithal to do it myself(I used to be a realtor), and what could amount to $18k in commissions would be a total waste, with my house and where I live and my willingness to handle it. I live in a very desirable area and houses usually sell immediately for or near full asking price. A nice situation to be in.
I have someone who is a friend of a friend who has now come by twice to look at the house because she knows it’s going to eventually be on the market and wants first crack at it. More than fine with me. I think she really wants it and is pretty agreeable to the price. Sweet!
BUT here’s where I’m nervous. I know she should be able to qualify for a loan easily. She said she spoke to her banker and he will only lock her into the current rate for the month of July. I HAVE to close Sept. 28 or later, for tax reasons. She sounds like if interest rates rise, which they will, she may have to back out because she’s all worked up about not getting locked in at this rate.
Although she’s a corporate attorney, I believe she becomes intimidated and anxious by decision making, and I think her banker(I don’t know who it is, yet) is pressuring her with making her afraid that if she doesn’t close asap, her payments will be through the roof, so she’d better act now! I know there’s validity to the rates possibly going up 1/2 pt. between now and Sept. 28, but:
I really want to sell this house to her. Can anyone recommend how I may be able to turn this in my favor? She’s very credit-worthy, and it seems like a lender, especially with the number of people taking out loans dropping, would be flexible to keep her business or let her buy the house she wants.
Can a lender lock in a rate for 90 days? What are our options? Any way to get the current rate on Sept. 28?
Thanks for any adivce and suggestions. A gold star for anyone who keeps this deal from falling apart!
Michael
Yes, I do believe you can lock for 90 days. I know for a fact you can lock for 75 days. Its going to cost money to lock, but you can. And by cost money, I mean it will alter pricing.
Does she own right now? If not, maybe she can buy it and just rent it to you until September? I dunno, I thought I’d throw that out there.
She rents month to month, which is rare around here and also works out perfectly for us. The reason I need to wait to close until Sept. is to avoid cap. gains tax, so selling it now would defeat the purpose.
How much are we talking, when it alters the pricing of the loan? If it’s not substantial, I might be willing to credit her for it, just so this deal would go through.
A longer term lock is more costly in the sense that you will have to lock a slightly higher rate than today’s market rate on a 30 day lock. Any time banks have to hedge their money for longer, they are going to charge a premium. You can lock with most banks up to 180 days, and some for longer. A lock more than 90 days will usually carry an up-front fee.
That being said, there are indications in the economy right now that rates may not rise over the next couple months and could decline. No one has a crystal ball, but there are some underlying indicators that suggest slight weakness or slowing in the economy. Many forecasters have been predicting for months that rates could start to decline or at least level off heading into late summer/ early fall.
There is also some concern and talk out there that the Feds could be over- shooting by continuing to raise rates. Inflation is still present, but it takes 6-8 months for rate hikes to work their way through the economy. So if economic data in the next several months starts to show more signs of weakening, there could be a risk of recession if the economy is already weakening because the effect of the rate hike that is likely to come today won’t fully hit the economy until December. A weaker economy means lower mortgage rates generally.
So to make a short story long, I don’t personally think that your friend should be concerned about rates rising going into september, and if they do, if the rise is only slight, she could lock then on a shorter term lock at the same rate she could lock now on a longer term lock. If she is conservative, then she should be able to grab a 90 day lock at a decent rate that would carry you through late September.
I hope that all made sense- didn’t mean to get too deep…
A long term lock is not a problem at all. Wells Fargo offers a 180 day lock for 1% of the loan amount with a floatdown up to 60 days before closing. My company offers long term locks at these rates.
