Locking in a loan rate has never been more crucial, with rates and the availability of eligible programs to qualify for a loan changing daily. Lenders need certain information from borrowers to ensure that a particular rate can be “locked in” before they can approve and fund a loan, the most important being the loan application, ability to repay, and credit score to secure a minimum 30-45 day period of a guaranteed lock rate. Non-QM loans must meet different criteria and require additional information to help borrowers gain approval for a mortgage. The rates are generally higher by at least a point in the Non-QM world because of the greater risk, and those with lower credit scores can see a significant jump in rates compared to loan-seekers whose scores are better. Having the rate locked in for as long as possible creates an extra buffer should more documentation be needed during the process since it is not uncommon to run out of time to produce those documents if the loan is delayed before the lock rate expires. Borrowers are then at the mercy of the lenders and may find themselves paying more than expected or even find the loan cannot be funded, especially in the current market.

With rates rising at the fastest pace since the 80s, the lock-in is much more critical at this time. When inflation, housing prices, and rates go higher, demand for housing falls. However, as fewer people are unable to qualify to buy homes, more inventory will eventually become available, and prices will subsequently come down, possibly providing an opportunity to purchase at a later date. Having the patience to wait for a more advantageous climate, researching what programs are applicable, and being prepared increase the likelihood of locking in a good rate and securing loan approval when the time is right. Jeff’s guests this week include:

– Lena Walther (awarenessprevention.com “Awareness is Prevention”) describes the work Awareness in Prevention is doing for the human trafficking epidemic.

– April Lopez (Nation’s Direct Mortgage) shares advice on locking in loans while rates soar.

– Arzo Yusuf (helptheafghans.org) discusses how her organization specializes in relief for Afgan refugees.