A First-Time Homebuyer's Guide, Start To Finish - The Strategic First-Time Homebuyer Book - Chapter 10 Under Contract: Rate Lock and Underwriting

April 28, 2026

r/NewbHomebuyer

......This is chapter 10, just scroll down a little beyond the intro and you'll pick up where you left off......

Hey guys, I spent a lot of time writing this book, and I had this subreddit in mind as I was writing it, so I thought I would post it here for you for free. If you want the physical book you can always go on Amazon, but here's my gift to you 😄

I'll include links so you can jump between chapters easily.

I hope you find it helpful.

The Strategic First-Time Homebuyer

Start to finish, with strategies to get approved and save thousands in interest, costs, and the down payment.

Introduction 1

Chapter 1 How Much Can I Afford? 3

Chapter 2 How Much Cash Do I Need? 16

Chapter 3 How To Find The Down Payment 30

Chapter 4 Your Debt To Income Ratio 41

Chapter 5 Choose Your Lender 69

Chapter 6 You’ve Been Denied (Your Credit) 80

Chapter 7 Selecting a Real Estate Agent 90

Chapter 8 Shopping For a House108

Chapter 9 Under Contract: Inspections and Appraisals 121

Chapter 10 Under Contract: Rate Lock and Underwriting 129

Chapter 11 How To Lower Your Rate 144

Chapter 12 Closing 163

Chapter 13 Post Closing 171

About the Author 190

Glossary 191

Chapter 10 Shopping for a Mortgage

This is the point where serious mortgage-shoppers will spend a day or two and shop rates.

Visit tools.newbhomebuyer.com/loanshop to use the LoanShop tool. It allows you to review if your loan offer is fair, if it’s a great deal, or if it’s a terrible deal.

You can also compare two quotes side by side and see which is better between the two.

I’m dedicating an entire chapter on how to lower your mortgage rate, so go to Chapter 11 if you’d like tips on how to get the lowest interest rate possible.

Shopping for Title Insurance

Here’s a reminder for you about title insurance.

There are two types:

● The lender’s policy

● The owner’s policy

Title insurance covers you and the lender if there is a dispute of ownership. The lender’s policy covers the lender, but they force you to pay for it. The owner’s policy covers the owner, and usually the seller covers it.

On your Loan Estimate and Closing Disclosure, you’ll see a section called “Services You Can Shop For” and that’s where the lender’s title insurance goes.

But people rarely shop for it. I’ll explain why, and show you what you can do about it.

How a Title Company is Selected

In a purchase, your real estate agent will assume that you don’t know any good title insurance companies, so they’ll pick it for you.

In a refinance, your loan officer will assume the same thing and pick the title agent.

Here’s how the agent probably came across the title company that they picked for you:

They Own It

The title company could be owned by the real estate agent or loan officer. If that’s the case, you’d need to sign a form being aware of the affiliation.

They Are Friends

They’ve probably gone out to lunch several times, and as long as the title agent keeps feeding the real estate agent lunch, then they’ll keep getting their business.

The Title Agent Was Recommended

If the title agent is competent and provides good service, the real estate agent will likely continue selecting them to do the title work.

Why this is bad for consumers

It's "reverse competition"

When you, as the buyer, are paying for something that you aren't selecting, it reduces price pressure.

I'll go into detail on how I'd shop for the best deal on a mortgage, but that just isn't happening with title insurance, so the premiums stay high.

Title agents retain the majority as a commission

This is meant to shed some light on where your money is actually going. I'm not trying to paint title agents as the bad guys here.

That line that says “lenders title insurance premium”?

Around 70%+ of that is actually retained as a commission to the title agent.

Some states like Florida and Connecticut have put a cap on this.

If the agent messes up and a claim is made against the title insurance, the agent would need to pay.

Title agents also carry their own insurance called Errors and Omissions so if they do make a mistake, they won’t always have to front the full claim.

Claims on title insurance are very low because of the upfront risk elimination. Fewer than 1% actually make claims.

How To Shop

I'd shop for title insurance similar to how I'd shop for a mortgage.

Once you're under contract, give yourself 1 day max to reach out to a few title companies. Your loan officer would know a few title companies, your real estate agent should also know a few.

Do NOT spend a lot of time on this.

Approach your real estate agent by saying "I'd like to shop the lender's title insurance. Which title companies would you recommend?"

This way your agent won't assume that you'll be going along with their chum.

Once you get those contacts, reach out to a couple, forward them your contract, and say "I'm shopping for title insurance, could you send me a quote of your fees?"

They'll be confused, because consumers rarely do this.

The net result is you might save a couple hundred dollars just by making a comparison.

Here’s a side note: if you're buying a new build, the builder might require you to use a specific title company. So no shopping for you. Some states also expect you to use the seller’s title company.

Take that for what it is, a couple of hours in phone calls and comparisons = $200-$300 in savings.

When compared to the thousands you'll pay in down payment and total closing costs, that might not feel like much.

But if you do it, maybe you won't feel so guilty about going out to eat for a nice dinner to celebrate your home purchase. This tip alone will save you the cost of buying this book.

If you need additional help here, visit tools.newbhomebuyer.com/title to use the TitleFinder tool to help you shop.

Shopping for Homeowners Insurance

Homeowners insurance isn’t the same as mortgage insurance.

“I put 20% down, I don’t need homeowners insurance” - someone told me that and I had to hold in my laugh.

Homeowners insurance is hazard insurance, for fire, earthquake, wind, and other damage.

Mortgage insurance is when you put less than 20% down.

I’ve seen closings nearly get delayed because the buyer couldn’t decide on which company to use for homeowners insurance.

Do NOT spend a lot of time on this one. Once you’re under contract, give yourself a day or two, and then commit. Cross it off your list and then move on.

Approach this the same way. Ask your loan officer and real estate agent who they’d recommend for homeowners insurance.

Get a quote from one agent, then forward that quote to another agent.

You’d want to compare coverages side by side too. One might be cheaper, but how is the deductible and how much less does it cover?

I'll say it again: If you need help shopping for insurance, visit tools.newbhomebuyer.com/insurance

As an example, a simple comparison saved one of my clients about $80 per month. It won’t always be that high, but every bit helps.

Rate Lock and Buydown

Your loan officer will want to know if you’re ready to lock in your interest rate. Since there are several rates you can go with, the loan officer will also want to know if you’d like to buy down your rate or not.

The Buydown

I’ve covered this earlier in the book when I went over points.

Here’s the chart again:

Interest Rate	Cost/Credit
6.375%	$1,500 Credit
6.250%	$0 Cost
6.125%	$1,500 Cost

Points and buydown costs are the same thing.

If you have seller credits and concessions, you probably don’t need to overthink this part. If you don’t have seller credits, it’s worth doing some extra math.

Visit tools.newbhomebuyer.com/buydown to review the buydown calculator. This will help you decide if the upfront cost is worth the monthly savings.

The Rate Lock

"You ready to lock this in?" - pressuring loan officer

"I don't know, I need more time" -you

"Rates change every day, it could get way worse tomorrow."

"Yeah, but I don't know if I want to buy down the rate or not, or if another lender is offering anything better."

"Rates could get worse while you're mulling it over. Then I won't be able to get this deal for you. I'm telling you it's a deal and no one can beat it. But tomorrow it won't be available."

"Okay, fine, lock it in."

You hang up the phone and think 'that didn't go as planned.'

Are you stuck with this lender now?

I’m covering this so you know ahead of time how this works, so you don’t feel stuck.

Here's what I'll cover:

● What does locking a rate do?

● Can you pivot between your locked rate, and a rate with a buydown?

● What is a 'float down'?

● Can you work with a different lender despite having locked in the rate?

What Is a Rate Lock?

When you lock your rate, your lender is basically saying: “We’ll honor this interest rate even if the market changes.”

Most locks are good for 30–60 days, sometimes longer if you're building a home.

Why lock? Because rates can jump unexpectedly. A rate lock gives you some peace of mind. You can budget around a predictable payment, even if rates spike next week.

This allows you to get your financing in order with a predictable payment and closing costs.

Floating vs Locking

If you don’t lock, your rate is “floating,” which means it moves with the market. This is riskier but can pay off if rates drop.

Floating = gambling.

If rates go up? You’re stuck paying more.

Floating might make sense if you think rates will drop and you’re not closing super soon. Otherwise, locking is usually the safer play.

Can You Change Rates After Locking?

Yes.

When you lock, you’re usually locking in a menu of options, or the rate table, not just one rate.

That menu (aka a “rate sheet”) includes higher rates with lender credits (help cover closing costs), and lower rates that cost more upfront (called points).

I know, I covered this earlier.

You can still switch between these choices later, you're not stuck with the exact rate you picked, as long as you stay on the same rate sheet.

The point is you can still pivot rates, so you don’t need to make the buydown decision immediately.

You can pivot between different rates, but make sure you do it with advance notice. Maybe 2 weeks before at the latest.

What Is a Float-Down?

A float-down is like a “just in case” clause. If you lock at 6.5% and the market drops to 6.0%, a float-down lets you grab the lower rate, usually one time.

It’s not always free.

Some lenders charge for it (flat fee or a small percent of the loan), and some only offer it if rates drop by a certain amount.

Ask your lender:

● Do you offer float-downs?

● How much does it cost?

● When can I use it?

● How far do rates need to drop?

Not all lenders offer this, so ask early.

Can I Change To a New Lender After Locking?

Yes.

In that first example, let's say you lock in a rate with a lender and say "let's proceed."

But then the next day a loan officer brings an offer that is way more compelling.

Can you take it?

Unless you’re Twisted Sister, then yes, you can take it.

Just because a loan officer pressured you into locking, it doesn't mean you can't continue to shop lenders.

I'd get your shopping done within the first few days of your contract, otherwise you could go weeks into the process and not make any progress.

Decide, and decide quickly.

Locking is a sort of 'free insurance' if you want to look at it like that.

It can't get worse than what you've locked. It can only get better.

A mortgage broker actually does this frequently. Here’s a common sequence:

The broker locks with one lender.
Rates get better.
That lender doesn't allow float-downs
Then the broker takes your loan to a new lender.

The first lender with an abandoned lock will get upset, and it damages the broker-lender relationship. But it happens a lot.

What I Tell People

Once we get to 2 weeks before closing, I tell buyers to put their blinders on. It’s probably not worth the risk of breaking your contract because you heard rates dropped 0.125%.

Two weeks out, keep your eye on the prize (the house).

Exception: The loan officer should keep an eye on rates. If it's a week out and there's a chance for a float-down, I'd take that one. Just not changing or transferring lenders.

Real-world strategy in action:

I had clients who locked in a solid rate.

Then rates fell.

The good news is they had a float-down and they used it.

Then rates fell again. Their lender didn’t offer a second float-down, so we switched lenders mid-process.

It was risky, but the savings were worth it.

Then rates dropped again.

The new lender let them float-down again.

The end result: multiple float-downs, new lender, and huge savings.

It’s not typical, but it’s a good reminder that understanding your options matters.

If you’ve chosen the flexible route, keep your eye on interest rates up until 2 weeks before closing. A lazy loan officer won’t check on it for you once you’re locked in.

Underwriting

Underwriting is the stage where everyone verifies that your loan and financial profile check all of the boxes.

You’ve been pre-approved, now they’re going to make sure nothing has changed since then, and they’ll want updated documents.

This could at best complicate the underwriting process, but it could also delay, or possibly disqualify you from getting a mortgage. Here’s a list of “don’ts” to keep in mind:

● Don’t change anything about your financial profile

● Don't go on vacation if your income is a variable type of income

● Don't change jobs

● Don't apply for other loans

● Don't deplete your savings

● Don't transfer a bunch of money around

If you end up doing one of those, it doesn’t mean you can’t buy a house anymore.

Take the “don’t apply for other loans” rule.

If you apply for and take out a new loan, it will just mean more paperwork.

Underwriting will want to verify how much you’ll have to pay toward that loan each month. They’ll want the loan agreement that lists it for you. Then they’ll take that monthly payment and apply it toward your debt-to-income ratio.

But let’s say you never told anyone about your new loan. Let’s say it went undiscovered up until 2 days before closing, and then suddenly they find out.

You’ll need to go back through the underwriting process with this new piece of information.

This could delay your closing, and if your debt-to-income ratio goes up too high, it may disqualify you altogether.

Simplify Underwriting

If you were to do any prep work for underwriting, it would be this:

Keep your down payment money in a separate, boring, savings account.

That account can only receive money. It doesn't pay bills, it doesn't pay rent, all it does is save for your mortgage.

When underwriters see your money in a checking account, they really do go through your charges.

They'll see if you get overdraft fees. They'll see if you spend money at Buffalo Wild Wings, and they'll see some charges that might raise an eyebrow, and then they'll ask for documentation to ensure that it isn't a recurring debt that needs to be counted against your debt-to-income ratio.

If your down payment money is in a savings account, they won’t see those charges, and they won’t ask for more paperwork.

The Triple Checkers

Underwriters are not just double-checkers, they’re triple-checkers.

They'll want updated pay stubs, they'll call your employer and make sure that you're still working there, sometimes on the very day you close.

They'll want letters of explanation for anything, like why your credit was pulled 1 month before you applied for the mortgage.

They’ll pull your tax transcripts and make sure it matches your W-2s or business taxes if you’re self-employed.

It’s more extensive than your pre-approval. It will feel excessive and a little intrusive.

By the time you get out of underwriting, the underwriter might know more about you than you know yourself.