Mortgage Rate Lock: Costs, Expiration and Lender Assistance
In part one of this two-part blog series, we went over some basics on mortgage rate locks for those buying a home. A mortgage rate lock is an offer from a mortgage lender to a buyer to prevent their interest rate from rising between their loan application and closing date, and it’s often useful for buyers in certain situations.
At Primary Residential Mortgage, we’re happy to assist clients with a variety of mortgage loan programs and needs, with programs ranging from conventional loans to FHA loans, VA loans and many other specialty solutions. We’ve helped numerous clients with rate locks and related needs, from laying out the basic details of this process to helping you determine if obtaining a rate lock is the right move given your situation. Today’s part two of our series will go over a few other important variables to keep in mind with regard to mortgage rate locks.
Cost of Rate Locks
One area that we won’t be able to define specifically for you here is the precise cost of a rate lock – this is because this cost varies, often significantly, between lenders. However, as you may have guessed, the key factors that help determine it are the term and amount of the loan you’re looking for.
In addition, an extra factor may be the lock-in period – there might be some mortgage locks that are free or come with a very low cost given their period, but others that are more costly. It’s important to ask your lender in advance about all the details of any rate locks they offer, including the lock-in period and whether this changes your potential costs.
Timeframe Expiration
Another common question we get regarding the mortgage rate lock: What happens if your timeframe on the lock expires without you finding a home?
In some cases, your lender may offer to extend the period for a fee. In other cases, however, this will not be possible, and you will lose that previous home rate and will have to base future calculations on the current rates available. For this reason, if you do get a rate lock, we recommend building in a cushion just in case things are delayed on your end.
Speak to the Pros
Still unsure if a mortgage rate lock is the right move for you? That’s totally understandable. Each mortgage situation and buyer is unique, and the only way to truly know whether a rate lock will be advisable in your case is to speak to your trustworthy loan officer and detail the specifics of your needs.
*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.