There is nothing we like more than an enthusiastic, gung -ho buyer in this market.
There is nothing we like less than a stressed out buyer who makes life hell for all involved.
So, when that gung-ho buyer locks their rate in for 30 days and we haven’t even signed contracts yet, it doesn’t take a clairvoyant to know there will be trouble down the road. And yet, every so often this occurs. We get an accepted offer on one of our listings, inspections are done, the lawyers are talking contract (remember, here in New York we do it backwards- no inspection contingency and a minimum of a week or more before signed contracts), and then we get that phone call or email from the other side that we have to hurry- the buyer locked in their rate last Friday.
Even in a cash deal, a 30 day closing in Westchester County is a rarity. 45 days is zippy, and 60 days about normal. Why that is so is another post entirely. The point is you don’t lock your rate in before we have a deal contractually. The buyer goes in stressed out already as it is, and in a state where a hiccup can cause a 2 week delay, adding that deadline unnecessarily throws gas on the flame. Knowing that we won’t close for 2 weeks and hearing that the buyer’s rate lock expires in 72 hours isn not fun. Just trust me on this.
You have to have a plan. You lock your rate in once you have a deal and there is light at the end of the tunnel. You have to have a plan and an understanding of what to do when after what and why. For example, once contracts are signed and the appraisal is done, the file should be sent to underwriting. Many buyer attorneys wait until the approval is issued to order title, which is too late in my view, but whenever you run title is probably when you should be ready to lock your rate in. That way, if there is a title-related delay, you know whether or not to hold off or proceed. The idea that this will cause you to lose an plum rate based on shifts in the market is a fallacy- a super awesome rate is less advantageous if you have to pay through the nose in cash for an extension, which is essentially paying discount points.
Understand the process, confer with your agent and loan officer, and plan accordingly. And if your loan officer allows you to lock in without really knowing where you are in the process, you might be working with the wrong person. This is a collaboration, and lone wolves don’t help.
In plain language, the old adage “lack of planning on your part does not constitute an emergency on my part.” Rate locks are serious business, and once done are irreversible.
Measure twice, cut once.