August 31st, 2009 8:22 PM by Eric Fang
Some clients asked whther the rate locks from the lender are free or not. Here is the explanation.
It's not free for the lenders. For each rate lock, the lender will pay certain fees to get the loan locks. There are a lot of parties involved to prepare the loan closing, financial department to secure the funds from the investor with costs, the underwriting team does not do it free either(whether they have their own UW team or out-sourcing to subcontractors).
It's not free for the brokers either. We will be penalized if we deliver less than 80% of the loans we locked. We will either get kicked out or the lender will get us the worse rate(compared those who have a better pull-through ratio).
And worse yet, sometimes when we can lock the "mandatory delivery"(We promise the lender that we will close the loan no matter what), we do get better rate for the clients, but the lender do penalize the broker if we don't close(We have to pay the lender money from our pocket).
So try your best to close your loan if you get the rate you planned to have.