Don’t Get Cornered When Locking in Refinance Rate

I take exception to certain comments by Robert J. Bruss in the Aug. 23 story “Questions to Ask When Refinancing.” It is unrealistic to only apply with lenders that will lock in the interest rate in writing for at least 60 days.

While it is true that certain types of adjustable mortgages can be locked for 60 days, when it comes to conforming or jumbo fixed-rate loans, the more attractive pricing is available for the shorter lock-in periods. If a borrower waits until his loan request is approved before locking in, lenders are willing to offer their 10- to 20-day locks. Those rates are .25% to .50% less than the rates for longer lock-in periods.

The major reason for refinancing is to save money. Rather than use a general rule to calculate one’s savings, a borrower should divide the new savings per month into the total cost of the refinance. This will determine how many months it takes to recoup the costs. If the homeowner intends on keeping the property longer than the recovery period it usually makes sense to refinance.

In dealing with a mortgage broker, try to get a referral from someone or check to see how long he or she has been in business. The California Assn. of Mortgage Brokers is an excellent reference. Its members are kept well informed of educational seminars, new industry trends and subscribe to a code of ethics.

STEVEN EGLASH

Sherman Oaks

The writer is the owner of a mortgage brokerage.