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Is this mortgage quote "bait and switch"?

Q: I was given a GFE for today at 3.25 percent with no costs apart from appraisal. When I submitted the loan application and told him I was ready to lock in, he said I would have to pay $1,700 extra dollars because rates changed midday. Can they do this? Is this bait and switch?

A: Interest rates can and do change frequently, and there can be a jump in costs from one day to the next. In your case, and with the limited information provided, it is hard to tell what the situation is--it might as little as a quarter-point fee on a $680,000 loan--which would be just a slight wobble in price over a day's time. Also, it appears that you got a Good Faith Estimate (GFE) before you actually submitted the application; if this is the case it would not be binding in any way. It's possible that there are add-on fees from Fannie Mae or Freddie Mac (determined by the intersection of your credit score and loan-to-value ratio) which may come into play, too. If you aren't satisfied with the quote, you can always cancel the deal, and all you would lose would be any non-refundable fee (possibly a few hundred dollars).

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