LOCK IN YOUR MORTGAGE RATE
A mortgage lock rate protects you, the borrower, during the duration of the transaction so that your mortgage interest rate will not increase by the time the transaction closes. It guarantees that the lender will offer the borrower a specific percentage interest rate and points. Points are a type of fee equal to 1% of the loan amount. If that rate rises after it is locked in the borrower will still get the lower rate. If the rate falls after the rate is not the borrower may not be able to take advantage of the lower rate.
(1) A rate can be locked only when the seller has accepted the purchase offer on a home
It cannot be locked in and tell that happens. The rate can be technically “floated” until the transaction closes, however, the rate should be locked at least a few days or a week before closing to allow time for the lender to prepare the documents.
(2) Rates are typically free for the borrower
However, the longer the rate is locked the higher the potential interest rate which could be more expensive for the borrower. The shorter term is locked the more risk the borrower is taking on but they might be getting a better price. Locking in your mortgage rate can be more expensive the longer the rate is locked in.
(3) If the rate lock expires before closing, the borrower can apply for an extension
If that is not possible the borrower may end up paying the market rate at the time, which could be higher.
(4) It really comes down to knowing exactly when you’re going to close
Your lender will do everything possible locking in your mortgage rate at the best possible terms. Your lender will also make sure that everything is signed off and ready to go by the time closing happens.
For more answers to your rate lock questions or if you’d like to start applying for a home loan and find out more information about it please give me a call at any time. We specialize in Northern Virginia, DC and Maryland real estate and would love to help you find the right home and loan for your needs.
Contact Gene Mock, Premier Team