Interest Rate

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  • #76506
    lastspen
    Participant

    Hello all!

    I had my first NACA appointment in June 2021 when the interest rate was 2% and became qualified on August 31 when the interest rate was 1.875%. My qualification letter states that I was approved for the 2% interest rate and not the 1.875%. Is this normal? I anticipated that my interest rate was locked in on the date that I was submitted to underwriting. Can someone provide some insight?

    #76507
    Nelsont
    Member

    Your qualification shows typical numbers based on the interest rate of the day – and the interest rate does change almost as frequently as the stock market. The numbers on the letter are for use as a guideline only and do not necessarily represent your situation based on the fact the rate changes sometimes daily and property taxes and insurance are completely unique to individual houses which has a direct effect on your monthly mortgage payment.

    The only number you should pay close attention to is your approved PITI. Because the taxes and insurance are unique to specific houses, because the interest rate changes and because you can use buy down it is very possible for any 1 of those circumstances (let alone all 4) to make a 300k house more affordable than a 250k house or even a 250k house more expensive than a 300k house (unusually high taxes and insurance compared to your neighbor).

    You are locked into an interest rate when you submit a contract offer for purchase.

    #76508
    Kristijay
    Participant

    @lastspen. Just to clarify, your interest rate will lock at bank application.

    #76577
    lastspen
    Participant

    Thank you @kristijay! That’s exactly what I needed to know.

    #76578
    Kristijay
    Participant

    No problem. It used to be that your interest rate would lock when you submitted your ratified contract and accepted the loan estimate from NACA, but that is no longer the case. The LE is now issued by BOA when you get to the bank app phase and that is when your interest rate locks.

    • This reply was modified 11 months ago by Kristijay.
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