If rate is to be locked in, always have it in writing

MAILBAG

November 07, 1999

Dear Mr. Azrael:

I started looking for refinancing in August and found three companies to decide upon.

In early September, I received a good faith estimate, truth-in-lending [statement] and servicing disclosure for all three companies. I decided to go with [a mortgage company with a 6.8 percent rate], and I informed the others of my decision.

In mid-September, [the mortgage company] said the best rate they can give is 7.9 percent. Can they do this bait and switch after I've dismissed others, and what is my recourse, if any?

Matt Brown Baltimore

Dear Mr. Brown:

There are so many mortgage companies and so many different types of loans today that it's no wonder consumers are often confused about which is the best choice.

Remember, the best loan may not necessarily have the lowest rate. Other factors to consider are the term of the loan, whether the rate is fixed or adjustable and how many points -- which equals 1 percent of the loan amount for each point -- are charged for the loan.

In your situation, the lender claimed that the interest rate increased over 1 percent in a single month.

Most lenders will lock in (i.e., guarantee) a rate for 30 to 60 days or in some cases longer. Rates can change quickly and you should have made sure the quoted rate could be locked in. When you decide to lock in an interest rate, the lender should confirm in writing that the rate is guaranteed.

Unless your lender told you the 6.8 percent rate was locked in or guaranteed, you probably have no recourse. You should check the paperwork provided by the lender to make sure what commitments, if any, the lender made.

Questions?

Real estate questions are answered by Jonathan A. Azrael of Azrael, Gann and Franz of Towson. Questions -- including name, address and daytime telephone number -- may be sent in the following ways:

Mailing address: Real Estate Mailbag, Fifth Floor, 501 N. Calvert St., Baltimore, MD 21278-0001. Fax: 410-783-2517. E-mail: real.estate@baltsun.com

Call our Sundial audio-response number, 410-783-1800. Enter code 6170.

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