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Interest Rate and Fee ProvisionSub-paragraph (B) reads: ”The interest rate and fee provisions in 8(A) are satisfied if the mortgage lender gives Buyer the right to guarantee the rate and fee at or below the maximum levels stated. If lender gives Buyer the right to lock in the rate, Buyer will do so at least 15 days before Settlement Date.” Mortgage Dragon section prepared you with the questions to ask the lender when you initially met. Both parts of sub-paragraph (B) quoted here will impact your ability to afford the house. Rate Exceed the Maximum?If the lender gives the Buyer the option to lock in rates below the maximum and the Buyer does not but waits for the rates to decrease, there could be a problem. The rates now increase above the maximum and the Buyer now locks in above the stated maximum. Since the Buyer could have locked in below the maximum, the Buyer is deemed to have met the stated criteria if this scenario takes place before the 15 day deadline. You must error on the side of caution if your PITI is close to the amount the lender will allow given the taxes for this property. As low as the rates are now, you must keep the settlement date in mind and the length of time the lock in will be effective. If settlement is not within the lock in range, your interest rate could increase. If APR Changes .125% …New federal law requires the mortgage lender provide a Truth in Lending (TIL) statement at the time you “make written application” see sub-paragraph (C) called early disclosure. The lender is also required to re-disclose if the annual percentage rate (APR) changes by more than .125%. That is not everything … the law also requires settlement not occur within 7 days of the early disclosure or within 3 days of the re-disclose. It gets worse! The TIL is not just a piece of paper with a new date. The underwriter has to reevaluate your mortgage and then re-disclosure is issued. The process could take 10 days – settlement could be delayed! BE CAREFUL! Return From Interest Rate To Part 2 – Mortgage Contingency |
