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Validity

It's also important to get rate quotes that will apply long enough for you to close the deal. You can get rate quotes for up to six months or more, but the longer the time the rates are valid, the more you'll pay.

Lenders will issue rate quotes for as little as 7 or 15 days as well, but that wouldn't be enough time to get your loan package together and get approved. There are lots of things that happen during a loan approval. Even though you see advertisements such as “Same-Day Approval” or “Close Your Loan in a Week,” it doesn't mean a whole lot unless all of the title work, appraisal, loan documentation, attorney review, and such has been completed.

Many contracts for existing condos, co-ops, and townhouses allow a 30-day period for buyers to close on their mortgage and take possession of the home. Thirty days is plenty of time to get all the things needed to dose a mortgage loan.

If your loan closes in 45 days and you don't ask how long that rate will apply, it really doesn't matter what the rate is, because it probably won't be valid after 30 days.

If your loan closes in 45 days, you should get rate quotes from your different sources for just enough time necessary to close your deal. If you close in 45 days, don't accept a quote for 60 days. For each additional 15 days beyond a 30-day quote, you can expect to pay an additional 1/8 of a point.

Origination Fees

Often quoted by mortgage brokers, an origination fee is also expressed as a percentage of the loan amount and is a fee to the mortgage company for producing, or originating, the loan for the lender. In some parts of the country, an origination fee is a standard charge and will be quoted on every rate offering as a matter of default.

If you're buying in an area where there's an origination fee, make sure all your loan officers include it in their quotes. A good question to ask would be, “What is your rate on a 30-year fixed-rate loan that is good for 30 days with no points and no origination charges?”

 
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