Philadelphia Weekly

REAL ESTATE

Timing is key when locking home loan

How lenders set their prices may surprise you

By Inman News Feed

Add Comment | Comments: 0 | Posted Oct. 29, 2012

Check your mortgage price if the appraisal comes in high

Locks that are issued before the property is appraised usually are conditional on a minimum appraised value. If the appraisal comes in below the minimum, the mortgage price will be raised. But if the appraisal comes in significantly higher, the borrower might deserve a price reduction, yet might not get it.

To check this out, the borrower receiving a favorable appraisal should check current pricing on the site to see whether the higher property value would result in a lower mortgage price than the lower value that had been assumed when the mortgage was originally priced. If the answer is "yes," the borrower should petition the lender to reduce the price accordingly.

The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.