A month ago, I received conditional approval for a 5/6 ARM loan at 4.75% with 0 points and a credit score of 730. However, my loan consultant now offers a final approval at 6.250% with 0.75 points. As a first-time homebuyer, I’m confused about whether this rate increase is typical or if I should discuss this further with my loan officer. Is 6.250% a fair market rate currently? What are my options if I feel this isn’t acceptable?
Was your initial rate locked in at the time of approval?
Blair said:
Was your initial rate locked in at the time of approval?
It sounds like it wasn’t locked.
Rates can change if they weren’t locked. What state are you purchasing in?
Cruz said:
Rates can change if they weren’t locked. What state are you purchasing in?
I’m buying in Michigan.
A jump from 4.75% to 6.25% seems unusual. Check if there was a mistake or misunderstanding with your loan terms.
Oli said:
A jump from 4.75% to 6.25% seems unusual. Check if there was a mistake or misunderstanding with your loan terms.
The property is a new construction, which I thought might influence the rate.
@Lennon
Does buying new construction typically affect mortgage rates that significantly?
If you have the initial offer documented, you may want to confront your loan officer about the drastic change and possibly report them if it seems they misled you.
Hal said:
If you have the initial offer documented, you may want to confront your loan officer about the drastic change and possibly report them if it seems they misled you.
I have all the initial paperwork stating the 4.75% rate. Should I consider legal action or just report them?
@Lennon
Reporting to the Consumer Financial Protection Bureau (CFPB) could be a start. They can investigate and take action if necessary.
This situation sounds like a bait and switch tactic. Be cautious.
If your rate wasn’t locked, unfortunately, the original rate was not guaranteed.