I assumed mortgage rate is locked, but lender told NO

[Raj G.]

Hi, I was in the process of buying a home in jersey city, NJ , I talked to many lenders and then finalized the lender who offered me best rate, lender told me that it's 1 float down mean if rates go higher I won't be affected but if rates go down then rate will go down once, I filled online application, submitted all documents. lender also gave me pdf document with mortgage rate and all other cost estimate.

Today when my attorney asked me for commitment letter, I contacted lender, then he told me that my rates are not locked and he needs to run again to see today's rate.

it was a shocking news for me, because today's rate are much higher then rate3-4 weeks back.

Just wondering if anybody else faced the same situation, what should be done, other then being a puppet in lender's hand.

[Chris Mason]

Within 6 days of sending a fully ratified purchase contract to your lender (3 days if you consent to electronic receipt of disclosures), you should receive this document from your lender.

In the upper right corner, it has a "rate lock" portion that is legally binding.

Hardcore rate shopping at the preapproval stage, and/or when you're just on the phone, encourages dishonest behavior, because folks will quote unrealistically low to keep you on the phone, as OP just learned. 

I go the other direction, and both quote AND qualify ~0.25% above current prevailing market rates at the preapproval stage. For all I know, rates will actually go up 0.25% between now and when you are done house-hunting, so I consider this prudent (old Marine saying: "hope for the best, plan for the worst"). On top of that, pragmatically, it serves to weed out people that aren't a good use of my time. 

@Raj G., email your fully ratified purchase contract to whoever quoted you the highest. See if they aren't magically significantly lower, now that you have a ratified purchase contract and are a live deal. That's the person with the "under-promise, over-deliver" business model.