Why does pricing sometimes change from what I was quoted over the phone?
When a broker or banker quotes you over the phone, they are giving you an estimate of what the pricing is at that exact moment. What many people don’t know is that the mortgage market moves just like the stock market moves.
Every day, every hour, every minute the mortgage pricing engines are adjusting themselves to what is happening in the live market. Not only does the market move, but until pricing is locked in… it is only an estimate. For most lenders, to lock in pricing they need your income documents (W2, pay stubs, Tax returns etc.), your approval to run credit AND receive signed e-disclosures. These are especially important because without income documents, there is no verification of employment or income. Without running credit, which takes your SSN and DOB, there is no guarantee that you will qualify for the loan requested and this is a great way to verify your identity. Your e-disclosures are giving the lender permission to work on your loan and to lock your pricing.
The longer it takes for the client to get the needed information over to their mortgage professional, the longer your pricing is floating(not locked), therefore constantly changing. If you are quoted on a Wednesday, but lock in pricing on a Friday, most likely it will be for different pricing than what you originally reviewed with your mortgage professional.
Even after locking my pricing, although the interest rate does not change, why do some costs change from what I was quoted on the phone?
When a mortgage professional is going over what your costs will be, they are estimating your county, government and tax fees, your escrow collection costs and your origination fees. Mortgage professionals are not title agents, they are not processors, and they are not tax experts. Most have tools like we do at Bayside Funding to calculate most accurately what those will be, however until a processor reaches out to the state and county, they will be only an estimate.
The collection of your escrow account, which is generally 3 months of taxes and 3 months of insurance, is estimated by your mortgage professional based on what you are currently paying in taxes and insurance, however we all know that taxes tend to go up. A processor will reach out to your county to check on a tax amount change and if your taxes have gone up, then so will your escrow collection.
If you have any questions, do not hesitate to reach out!
Regards,
Dominic Leoni
President
1000 BRICKELL AVE, STE 715, MIAMI, FL 33131
CORPORATE NMLS: 2221998
MLO NMLS: 1991943
305.204.0526
dominic@baysidefunding.com
www.baysidefunding.com
www.nmlsconsumeraccess.org
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