Is it risky to close few days before lock expiration for refinance?

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need403bhelp
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Is it risky to close few days before lock expiration for refinance?

Post by need403bhelp » Thu Feb 13, 2020 8:42 pm

Good evening:

I am refinancing and our refinance has an included "float-down" option where, if the 30 year fixed rate at https://fred.stlouisfed.org/series/MORTGAGE30US goes down by 0.25 from when we started (~0.07 from now), our rate will be lowered by 0.125%. We can let them know as soon as one business day before close to adjust the rate. The rates on that site are updated on Thursdays around mid-day.

We are now ready to set a closing date. I'm thinking of setting the closing date for the last possible date within our lock period (a Friday) that would allow me to "float down" the rate in our loan if 30 year mortgage rates move down ~0.07 from what they are today. This would give us 1-2 business days between close and rate lock expiration. Is this risky or does it seem reasonable? If risky, what kind of things could go wrong?

Thank you!

stan1
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Re: Is it risky to close few days before lock expiration for refinance?

Post by stan1 » Thu Feb 13, 2020 8:52 pm

Well, in our case the seller spontaneously left the country 3 days before closing without signing any documents. She had to make her way to a US consulate and overnight the documents back to us. Delayed close by 5 days. Probably rare but stuff happens.

Ned Nederlander
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Re: Is it risky to close few days before lock expiration for refinance?

Post by Ned Nederlander » Thu Feb 13, 2020 8:58 pm

Are you accounting for the 3 day rescission period, assuming this is your primary residence? I actually just floated down myself two days ago on a 5/1 arm. I have 45 days left in my lock but we’re just about ready to close and I’m happy with the rate.

Golf maniac
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Location: Florida

Re: Is it risky to close few days before lock expiration for refinance?

Post by Golf maniac » Thu Feb 13, 2020 9:29 pm

3 day right of recession has no impact. Yes, you can close a day or two before rate lock expiration and should be fine.

Topic Author
need403bhelp
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Re: Is it risky to close few days before lock expiration for refinance?

Post by need403bhelp » Thu Feb 13, 2020 10:07 pm

stan1 wrote:
Thu Feb 13, 2020 8:52 pm
Well, in our case the seller spontaneously left the country 3 days before closing without signing any documents. She had to make her way to a US consulate and overnight the documents back to us. Delayed close by 5 days. Probably rare but stuff happens.
Thanks for sharing your experience. Thankfully, no seller involved in a refinance, so hopefully that wouldn't be a possibility!

Topic Author
need403bhelp
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Re: Is it risky to close few days before lock expiration for refinance?

Post by need403bhelp » Thu Feb 13, 2020 10:08 pm

Golf maniac wrote:
Thu Feb 13, 2020 9:29 pm
3 day right of recession has no impact. Yes, you can close a day or two before rate lock expiration and should be fine.
Thanks for sharing your experience. Not 100% sure how recession would impact the float down option either.

Topic Author
need403bhelp
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Re: Is it risky to close few days before lock expiration for refinance?

Post by need403bhelp » Fri Feb 14, 2020 9:01 am

Ned Nederlander wrote:
Thu Feb 13, 2020 8:58 pm
Are you accounting for the 3 day rescission period, assuming this is your primary residence? I actually just floated down myself two days ago on a 5/1 arm. I have 45 days left in my lock but we’re just about ready to close and I’m happy with the rate.
No. My refi has option where they will float down rate by 0.125% if national rates drop 0.25% or more, and they have already dropped ~0.17% or so from when I locked, so don’t want to miss a potential 0.125% decrease in my rate.

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Cubicle
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Re: Is it risky to close few days before lock expiration for refinance?

Post by Cubicle » Sat Feb 15, 2020 12:11 am

Anecdotally, I closed 2 days before my rate locks (& bank documents) were going to expire. No issues. Though each process is individual & variable.

I'd continue with your plan as is.

Topic Author
need403bhelp
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Re: Is it risky to close few days before lock expiration for refinance?

Post by need403bhelp » Sat Feb 15, 2020 11:08 am

Cubicle wrote:
Sat Feb 15, 2020 12:11 am
Anecdotally, I closed 2 days before my rate locks (& bank documents) were going to expire. No issues. Though each process is individual & variable.

I'd continue with your plan as is.
Thank you so much for sharing your experience re closing 2 days before rate locks & bank documents were going to expire & for your advice.

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