As mortgage rates have start what was certain to be their inevitable ascent, some lenders are bringing back ‘lock and shop’ programs to assist borrowers in purchasing a home.
With ‘lock and shop’ programs lenders will credit approve a homebuyer and then lock in their interest rate BEFORE they find the property they want to buy.
As with standard rate lock programs, if mortgage rates goes up, the borrower still receives the lower, locked rate. And if the rates decline, the homebuyer will have an option to float down to lower rates.
The ‘lock and shop’ program isn’t a new tool to the market, however, most lenders discontinued their programs when volatility hit the market.
The reintroduction of a program that seemed to provide more liability than advantages to lenders is the result of lenders refocusing their attention on purchase loans as rising mortgage interest rates have significantly impacted their refi business.
Lenders are now attempting to differentiate themselves, leveraging new products and programs to beat out the competition. Mortgage professionals will use the program to increase their business growth.
Many lenders who have focused all most exclusively on refi business are now scrambling for loans and looking for any competitive edge they can find. As the lending market becomes more competitive, some lenders are exploring riskier products to replenish declining loan volumes.
Some are returning to products traditionally thought of as riskier to lenders including offering financing to buyers with lower credit scores. It’s a demand driven concept whereby even housing advocates are asking for more homebuying finance options.
The threat of increasing interest rates stripping away a borrower’s loan approval is removed from the equation. This means less fallout and a greater opportunity to deliver excellent service to borrowers and referral partners. In addition, loan professionals want to work for a company that offers these types of innovative programs.
If you, or someone you know is considering Buying or Selling a Luxury Home in Columbus, Ohio please contact The Opland Group. We offer professional real estate advice and look forward to helping you achieve your real estate goals!
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