What to do if I locked in at a rate with my bank, signed the lock-in aggreement, but now the bank wants to give change things?

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What to do if I locked in at a rate with my bank, signed the lock-in aggreement, but now the bank wants to give change things?

I locked in to my rate with the bank a few weeks ago (@ 3% down and an interest rate of 4.625%) and the agreement says the lock-in period is good until 12-25-10. The bank appraisal finished earlier this week, and today they called to inform me that the prior rate 4.625% cannot be given to me based on information from their underwriter that my credit was not good enough. Also,they are demanding my down payment go from 3% to 10%. I find this hard to believe considering I already signed a lock-in agreement at that rate, based on my current financial status and nothing has changed. Is this legal?

Asked on November 11, 2010 under Real Estate Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

For a definitive answer, you need to look VERY carefully at all the documentation you provided and everything you have received and signed; this is a contractual matter, and so the terms of the contract (the documentation) control. However, I suspect very strongly it is legal:

1) The agreements themselves probably contain language to the effect that the final terms are subject to underwriting and/or prevailing interest rates in the market

2) Even if they don't contain that language, if you were given the down payment number and the rate based on what you reported as the value of the home you wanted to buy and a appraisal concluded that it had a different value, that change in the initial condition would usually justify a change in the terms.


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