Builder delayed COE - Rate lock extension fee?

S

shiog

New member
Hello, first time home buyer here and would like to consult the wisdom of TI

The builder just notified me that the COE date has been delayed by a week. I locked the rate with the builder's preferred lender (Wells Fargo), but the rate lock expires before the new COE date. Wells Fargo said they can charge a rate lock extension fee of 0.25% for 2 weeks (min duration).

Does anyone have experience with this? I'm planning on talking with the builder to see if they can cover any part of the fee, but would like to know if anyone were able to get the builder to pay for the fee.

Thanks.
 
Generally speaking, if a builder says they will close on day X, it's recommended that you lock your rate at X, plus 2-3 weeks. Most builders close on time or early. "Most" does not mean "all" so anyone not locked at this time should consider pricing your loan with some wiggle room on the close date.

Specific to your deal, given that rates have eased up a bit since you originally locked, extending the lock should be at 0.00 cost. Also, if you're using "The Builder's Lender" (don't know if this is the case) the lender and builder speak every week, if not daily on closing timelines. This delay isn't new information and could have been planned around. Did you "under lock"? Perhaps. Could you have been told a delay was possible and to lock accordingly? Sure.  Bottom line: get the builder's  lender to extend at no cost. Didn't use the builder's lender? Get them to extend at no cost. Rates are likely at or lower than when you locked and the cost to extend can be zero.

My. 02c


 
Soylent is right. This is worth a lot of fighting. You can't possibly be locked at a rate that's more than an eighth lower than the rate available to you today. This should be easy and at no cost.

Most LOs would strongly advise you not to lock with an expiration date too close to COE. This is odd too.
 
This happened to me (using builders lender) and they extended for free. But I did find about the delay a week after locking.
 
Thanks all.

The builder is California Pacific Homes and their lender is Wells Fargo.

The LO from WF I originally worked with left and they assigned someone new when I was doing the rate lock. This new guy did not warn about locking too close to COE.

Looks like I need to prepare myself for a fight with the LO.
 
Curious how this worked out.

Heard from a buyer who is purchasing in another development (not CalPac) and they've moved the closing date out over a month. That's causing the lock to blow out or some question about extending the lock for $$$. With that kind of extended timeline, one could easily move from Lender A to Lender B and still close on time providing that the rate lock cash paid up front isn't significant.

"If a buyer jumps ship, won't they have to pay for another appraisal?" Sure. The appraisal fee paid up front to Lender A is gone if you switch lenders. Lender B's fees are likely to be the same, only if the rate is significantly lower, isn't it better to save $100 per month while spending $700 on a new appraisal, than to keep the higher rate? The break even is pretty quick in this case.

"The builder won't let us switch this late in the game". That's not quite the case. If you switch to another one of their in-house lenders, that's OK. So switching is more a case of the builder asking "can you close on time?" and getting a solid answer than anything else.

What ever happened with your rate lock challenge?

My .02c
 
Isn't one of the benefits of going w/ the builder's preferred lender that the buyer minimizes the risk w/ any delays regarding COE?  That's what was communicated to me while researching lenders. 

WF claims to be operating in lock-step w/ the builder regarding time lines.  To me, that's their main selling point b/c you can probably get better pricing elsewhere. 
 
Soylent Green Is People said:
Curious how this worked out.

Heard from a buyer who is purchasing in another development (not CalPac) and they've moved the closing date out over a month. That's causing the lock to blow out or some question about extending the lock for $$$. With that kind of extended timeline, one could easily move from Lender A to Lender B and still close on time providing that the rate lock cash paid up front isn't significant.

"If a buyer jumps ship, won't they have to pay for another appraisal?" Sure. The appraisal fee paid up front to Lender A is gone if you switch lenders. Lender B's fees are likely to be the same, only if the rate is significantly lower, isn't it better to save $100 per month while spending $700 on a new appraisal, than to keep the higher rate? The break even is pretty quick in this case.

"The builder won't let us switch this late in the game". That's not quite the case. If you switch to another one of their in-house lenders, that's OK. So switching is more a case of the builder asking "can you close on time?" and getting a solid answer than anything else.

What ever happened with your rate lock challenge?

My .02c
Click to expand...

Heard Greenwood might be delayed due to Edison company not having electrical in and they have no idea when it will be done. Currently models are all on generators.
 
paydawg said:
Isn't one of the benefits of going w/ the builder's preferred lender that the buyer minimizes the risk w/ any delays regarding COE?  That's what was communicated to me while researching lenders. 

WF claims to be operating in lock-step w/ the builder regarding time lines.  To me, that's their main selling point b/c you can probably get better pricing elsewhere.
Click to expand...

If you use the builder's designated lender, then if there are delays caused by the lender, the builder will not charge you "late fees." If you use an alternative lender, and they're the cause of a delayed closing, you're subject to daily fines.

I've found Wells' pricing is better than others, if you're looking for an 80% LTV 30-year fixed rate jumbo loan. Wells' extended rate lock pricing and terms are pretty good too.
 
I'm in this boat. Just notified our COE date is being moved two weeks. Our rate lock expires one week after the original COE date. I'll be talking to Wells on Monday about rate lock extension fees. Am I really looking at 25 bps to extend my 3.5% rate for a week?
 
Perspective said:
I'm in this boat. Just notified our COE date is being moved two weeks. Our rate lock expires one week after the original COE date. I'll be talking to Wells on Monday about rate lock extension fees. Am I really looking at 25 bps to extend my 3.5% rate for a week?
Click to expand...

Wells Fargo is extending our rate lock date three weeks at no additional cost. Phew.
 
Perspective said:
Perspective said:
I'm in this boat. Just notified our COE date is being moved two weeks. Our rate lock expires one week after the original COE date. I'll be talking to Wells on Monday about rate lock extension fees. Am I really looking at 25 bps to extend my 3.5% rate for a week?
Click to expand...

Wells Fargo is extending our rate lock date three weeks at no additional cost. Phew.
Click to expand...
Congratulations.  Glad things are working out.  Now, all left is to close and decorate.
 
Bomberman949 said:
Perspective, were you on a 60 or 90 days lock with wells? I'm in a similar situation. COE for phase 15 is delayed 2 weeks.
Click to expand...

We were on a 90-day lock that expired 1/20/16, but we exercised the float-down option (going from 3.75% down to 3.5%) in late October that moved our rate lock expiration to 12/28/15 - effectively a 60-day lock from the float-down date.

So, you're on Quarter Horse in Phase 15? There are some big lots on that street.
 
Sorry for the delayed response! My rate was also extended for no cost, but it was a shady experience.. My LO told me they were about to send out the loan docs to escrow with the locked rate and asked me to sign it as soon as escrow received it. He said that even though the rate lock expires before COE, as long as I sign it and have it submitted to escrow he will take care of any issues.

I was very suspicious but it did work out in the end.
 
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