Q: I was given a GFE for today at 3.25 percent with no costs apart from appraisal. When I submitted the loan application and told him I was ready to lock in, he said I would have to pay $1,700 extra dollars because rates changed midday. Can they do this? Is this bait and switch?
A: Interest rates can and do change frequently, and there can be a jump in costs from one day to the next. In your case, and with the limited information provided, it is hard to tell what the situation is--it might as little as a quarter-point fee on a $680,000 loan--which would be just a slight wobble in price over a day's time. Also, it appears that you got a Good Faith Estimate (GFE) before you actually submitted the application; if this is the case it would not be binding in any way. It's possible that there are add-on fees from Fannie Mae or Freddie Mac (determined by the intersection of your credit score and loan-to-value ratio) which may come into play, too. If you aren't satisfied with the quote, you can always cancel the deal, and all you would lose would be any non-refundable fee (possibly a few hundred dollars).
A 25-year expert observer of the mortgage and consumer debt markets, Keith Gumbinger has been cited in thousands of articles covering a wide range of consumer finance and economic topics in outlets ranging from the Wall Street Journal to the Bottom Line newsletters. He has been a featured guest on national broadcasts for CNN, CNBC, ABC, CBS and NBC television networks and has been heard on NPR and other national and local radio programs. Keith is the primary researcher and writer for HSH.com's MarketTrends newsletter and has authored or co-authored a number of consumer guides on mortgages, home equity, refinancing and more.
