Help! Lender raising rate 12 days from close

[David H.]

Good evening BiggerPockets! I am looking for advice on an issue I am experiencing in the 11th hour with my credit union.

I am purchasing a duplex to be owner occupied with my girlfriend.

- We have a close date of February 3rd.

- Our credit union provided us with a pre-qualification letter on September 19th.

- They provided us with a commitment letter on December 23rd. Here they committed to a rate of 3.75% with 10% down.

- A rate-lock was provided on January 10th locking in the rate of 3.75%

- Today (Janurary 21st) my mortgage lender called to tell me they had to re-run our credit and my girlfriends credit dropped to 679, one point below the minimum acceptable for the product we were offered. As a result they are increasing our rate to 4.25% 12 days from the closing date.

My girlfriends credit dropped due to the credit pulls that have been done in the process of getting this loan. Be it from the insurance company and we did shop the rate at 2 different lenders in early December. The frustrating thing is one of those lenders offered us a lower down payment with a 4.5% rate which I would have happily taken if I knew I would be bait and switched to 10% down with a 4.25% rate. Has anyone had an experience with this? Does anyone have any suggestions on how to resolve this? Do I need to just lay down and take it? 

Thank you!!!

[Chris Mason]

LO should have run updated credit once you went into escrow. Almost exactly 4 months on the button. 

Credit reports actually expire after 4 months. Most places quote 3 months to allow for the 1 month in escrow.

679 v 680 is a big cutoff for a lot of stuff. 

Even if they had run updated credit right when you went into escrow and it came in at 679, it's better that the borrower knows that upfront so it's not a last minute surprise. It's illegal for that LO to get paid any more or less depending on your rate, but it sure doesn't feel like that to you in all probability. 

Make sure you aren't paying points for the rate; you more or less know you will be refinancing in six months or so, so best not to buy down a rate that is only temporary anyways.