What is a rate lock?
A rate lock is a written agreement in which we guarantee you a specified interest rate, provided the loan closes within a set period of time. You cannot close a mortgage loan without locking in an interest rate. There are four components to a rate lock: interest rate, loan program, points, and length of the lock. The longer the length of the lock, the higher the points or the interest rate. This is because the longer the lock, the greater the risk for the lender offering that lock. After a lock expires, most lenders will let you re-lock at the higher of the original rate/points or current rate/points. In most cases you will not get a lower rate if rates drop. Lenders can lose money if your lock expires. This is because they are taking a risk by letting you lock in advance. If rates move higher, they are forced to give you the original rate at which you locked. Lenders often protect themselves against rate fluctuations by hedging. Some lenders do offer free float-downs-i.e., you may loc
A rate lock is a lender’s commitment to give you an interest rate for a specified period of time. “Locking In” the terms of the loan guarantee that if rates go up, that you will have the rate at time of locking. The loan must be completed within the lock period, if for some reason your loan is not completed before the lock expires, the terms of the loan will either be those at the time of closing or at the time of the lock, whichever is higher.
There are four components to a rate lock: loan program, interest rate, points, and the length of the lock. The loan program is the type of loan you are locking (Conventional, FHA/VA). The interest rate is the rate that is available under current market conditions. Points are a tool to buy down the interest rate. One point equals one percent of the loan amount. The length of the lock is the period of time that the lock will be good for. Available options are 15, 30, 60, 90, 120 and 180 days. As the lock period increases, rate tends to increase as well.
You cannot close a mortgage loan without locking in an interest rate. There are four components to a rate lock: Loan program, Interest rate, Points, Length of the lock. The longer the length of the lock, the higher the points or the interest rate. This is because the longer the lock, the greater the risk for the lender offering that lock. Let’s say you lock in a 30-year fixed loan at 6% for 2 points for 15 days on March 2. This lock will expire on March 17 (if March 17 is a holiday then the lock is typically extended to the first working day after the 17th). The lender must disburse funds by March 17th, otherwise your rate lock expires, and your original rate-lock commitment is invalid. The same lock might cost 2.25 points for a 30-day lock or 2.5 points for a 60-day lock. If you need a longer lock and do not want to pay the higher points, you may instead pay a higher rate. After a lock expires, most lenders will let you re-lock at the higher of the prevailing market rates/points, or t
A10: A rate lock is a contractual agreement between the lender and the buyer. There are four components to a rate lock: » Loan program » Interest rate » Points » Length of the lock Once you have completed a loan application and chosen a property, you can lock in your interest rate. Locking in a rate allows you to keep a certain loan program and interest rate over a specified amount of time, even if the interest rates go up during that time. Usually, rates are locked in on a 30, 45 or 60-day basis. Keep in mind, a lock usually cannot be changed, so it is important to consult your mortgage professional for advice. In addition, most lenders will not adjust your lock if rates drop, unless the drop is substantial. If you need free advice on when to lock, click here. (Click Here for Top of Page) Q11: How long will it take to apply and close a loan? A11: The average amount of time from application to close is 30 days, but this time may vary depending on your financial circumstances. We have c
