During a rate lock period, market rates increase by 0.75%. The borrower asks to switch from a 30-year fixed to a 15-year fixed loan with the same lender while keeping the locked rate. What is the most appropriate response?
Correct Answer
B) A new rate lock is required because this constitutes a material change
Changing from a 30-year to a 15-year loan term typically constitutes a material change to the loan program, requiring a new rate lock. Different loan terms have different pricing structures, and the original rate lock was specific to the 30-year product. The lender would need to provide new pricing for the 15-year loan program.
Why This Is the Correct Answer
Changing from a 30-year to a 15-year loan term typically constitutes a material change to the loan program, requiring a new rate lock. Different loan terms have different pricing structures, and the original rate lock was specific to the 30-year product. The lender would need to provide new pricing for the 15-year loan program.
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