When you apply for financing to buy a rental property you’ll soon find your inbox has just received some
attachmentsSome Disclosures Are More Important Than Others that took quite a while to download. They’re your loan disclosures and there are a lot of them, and with a rental property there are even more.

Most loan officers will explain those  documents to you over the phone or ifyou meet with them and usually you’ll hear something to the effect of, “Oh, those are just boilerplate, those are included with all loan packages.” That’s mostly true and they’re all important. And trust me, lenders aren’t all that happy about all the required disclosures as they’re the ones to distribute and review them once signed and initialed. One form that you do need to pay very close attention to that is nothing at all like boilerplate is your rate lock agreement.It might surprise you that the rate you originally were quoted has changed. Mortgage rates are a dynamic lot and prices change for mortgage backed securities throughout the day. You could have shopped around for days on the internet and made multiple phone calls to find the very best deal for you next rental property only to find out the rate you want isn’t available. Or if it is, it’s not guaranteed. Yet.

 

Yes, there in the fine print on all interest rate quote advertisements that tell you that interest rates aren’t guaranteed and the rate quoted is not a loan guarantee. But what lenders will tell you in their rate lock agreement how and when you may lock in your rate. You will review the document, initial it and return along with the others. You can expect to lock your rate only after the lender has received a completed loan application along with a copy of your signed sales contract. Your credit report must be reviewed as well as your financials. Once the lender has determined you qualify for their best rates and you’ve fulfilled the terms laid out in the lock agreement, you’re free to lock.

 

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