Does Locking a loan make sense?

Normally, I would say yes in almost every situation - except now. Why? There are a couple of reasons. First, lenders are backed up with huge volumes of re-fi's right now. To complete a refinance takes anywhere from 30 to 60 days.

Second, as you look at the premiums to lock - it gets very expensive to lock a loan for 45 or 60 days.

Third, with the government saying it is committed to keeping rates low for some time to come, it might be safe to assume the recent run up in rates is only temporary. This assumption is the key. If the government truely is committed to getting housing back on its feet, then we can expect rates to come back down.

So with all this, why would you pay a big premium to lock a loan, only to find out rates are coming back down?

Of course if you are looking to refi right now, and are in no rush, my advice is to sit tight, get the paperwork ready, and wait a week or two.

If you'd like to discuss it further, you can find my contact info at www.neighborlyfinancial.com.

new appraisal rules

One more thing about keeping busy the last few weeks. Appraisals. We have been spending a lot of time working on the new appraisal process for clients. Effective May 1, new appraisal rules went into effect, as a result of new federal guidelines. These new rules effectively transfer control of the appriasal process from the borrower to the lender. Banks are now responsible for selecting the appraisers that are used to value your house - not entirely bad, given the large number of bogus appraisals in the past, but it does create a great deal of uncertainty and frustration for buyers in a market that is akin to walking on quicksand.

If you are going for a refi, be aware that appraisals will be much more conservative, and that any appeal to the process will be frustrating and potentially expensive. There are new fees for appraisals and it is usually expected to pay up-front.