What is a rate lock?
In order to close a mortgage you must lock in a rate and loan program. Locking your interest rate means your lender guarantees the rate on your loan even if market rates change. Typically, the longer the lock on your mortgage, the higher the points or the interest rate of the loan. This is because the longer the lock, the greater the risk for the rates to increase prior to closing. Return to Top Why would I want to refinance my current loan? Many homeowners look to refinance when the interest rates decline or they have a change in financial circumstances. Refinancing is done to save money by obtaining a lower interest rate or reducing the term of the loan. Refinancing can also be done to convert an adjustable-rate loan to a fixed-rate loan or to consolidate debts. Our experienced mortgage consultants can help you make an informed decision. Return to Top What is a cash-out refinance? If you have enough equity in your property, you can refinance with a loan amount greater than your curre
A rate lock is when the borrower and lender agree to “lock” in the interest rate and corresponding points on a particular loan. Once you lock-in your rate, if the market goes up or down, your rate will not change. Loans are generally locked for periods of 12 or 30 days depending on how long it will take to close and record that loan. If for some reason the loan does not close in time, the interest rate and points will be determined by those that were locked in, or those that are currently available, whichever is worse.
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. Suppose on March 2 you obtain a 15-day lock for a 30-year fixed loan at 6 percent, 2 points. The 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 original rate/points or current ra
You can’t close a mortgage loan without locking in an interest rate. There are four components to a rate lock: Loan program, Interest rate, 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 current market rate/points or the originally locked rate/points. In most cases you will not get a lower rate if rates drop. In some cases, you may be able to negotiate a rate lock extension at the original price, but this must be done with the lender prior to the rate lock expiration date. An additional fee may be charged for this extension 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.
