When a borrower purchases a house, they are faced with a closing date. On this closing date, borrowers must provide funding to complete the purchase. What this means, is that there is a point where there is no longer enough time for the purchaser to back out of a deal with a loan provider. At some point in the middle of this transaction, the purchaser is literally at the mercy of the provider.
If a borrower has not locked the price of the loan in by this point, they may end up particularly vulnerable. Loan providers promise to lock rates “at the market price”, but the market price is actually whatever the loan provider decides to say it is, and therefore can make it possible for providers to cheat.
Even if the borrower has managed to lock his or her rate, only the rate and the points are actually covered. Locks do not cover lender fees that are expressed in dollars, nor do they protect third party settlement charges. There are many ways for these fees to be increased later.
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