Can I hold my Home Loan
costs, but your interest rate will be sell the home in 6 months, then it does
Officer to the interest rate
higher. Have your Home Loan Officer not make sense for them to refinance.
if they have informed me
do an analysis for you to see if this loan A good Home Loan Officer will ask
that they have locked in
is in your best interest verses paying important questions to advise you if
the interest rate?
closing costs for a lower interest rate. you should or should not refinance.
E: Let’s say Mr. Smith has a loan Why is the interest rate
After your interest rate has been locked
of $400,000. His payment on 7% for a on the Truth In Lending
in, you will receive that rate based upon
30 year fixed loan is $2661.21 and Mr. higher than the interest
the following three factors:
Smith has $6,000 in closing costs to rate I was quoted?
a. The amount of equity in your home
obtain this loan. Let’s now look at Mr.
This is not your true interest rate. This
or the amount of money you are putting
Smith having no closing costs and an
rate is your APR, also known as annual
down does not change.
interest rate of 8%. His payment will be
percentage rate. The APR was put in
b. If you close on your loan within the
at $2935.06. This equals a payment that
an Act to protect you from high cost
timeframe you locked your interest rate
is higher by $273.85 per month. If Mr.
lenders. For example, Lender A may
in.
Smith did not want to be in the home
state they have a rate of 6% and Lender
c. If your loan approval is still the same long, then a no closing cost loan would
B may state they have a rate of 6% as
and has not changed. If any of the above be best for him. Otherwise, let’s take
well. Lender A will have $4,000 in costs
does change, then your interest rate the closing costs of $6,000 and divide
and Lender B will have $7,000 in costs.
may no longer be valid and will need to it by his savings per month of $273.85.
As a result, Lender B will have a higher
be relocked on that day’s interest rate We come up with 21.91, which equals
APR that is on the Truth In Lending. It
pricing. 1.83 years. If Mr. Smith were going to
is a way to protect you from a home
Do I have the option to
be in the home longer than 1.83 years,
loan officer trying to quote you a lower
not lock in my interest
then he would want to pay closing
interest rate but not inform you of the
rate and hope that they
costs. If he were in the home for 5 years
higher fees that they will charge you to
go down?
and opted for a no closing cost loan, he
obtain the loan.
would end up paying more money for
You can, but you do take a gamble as “But beware, not all Lenders disclose
the home.
interest rates can change up to several on the TIL correctly, so it is always
times each day. Our philosophy is this:
Should I only refinance
better to look at the actual costs on
If you are happy with the interest rate
if I can come in with the
both Good Faith Estimates. This way
and payment offered, then inform your
closing costs?
you know what the fees are and who
Home Loan Officer that you want to
This is a good question. Let’s say that it
is really charging more in costs than
lock in your loan as soon as possible.
costs a person $4,000 to refinance, but
relying solely on the APR”.
What’s the skinny on no
they are saving $400 per month in their

closing cost loans?
mortgage payment. If a person does
not have the $4,000 to bring in cash at
Yes, there are loans that have no closing
closing, it still makes sense for them to
costs. Lendingladies.com is sure that
refinance since they may be able to add
you would agree with the adage: You
the closing costs to their new loan. Now
can’t get something for nothing. You
let’s say that the person was going to
can receive a loan that has no closing
2 www.coloradohomeownermag.com article layout: Jeff Scherr
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