Mortgage rates change quickly, often times daily.When someone is in the market to purchase or refinance a home, they are often concerned with getting the lowest rate possible.However, the mortgage loan process can take a little while to complete.With a rate lock the mortgage lender is agreeing to hold the rate and points earned at the same amount for a period of time.Usually just enough time to get the loan completed.Floating and Locked In Rates Lenders will often offer different options when locking in rates.When rates or points are not locked in, they will be considered floating.If the borrower locks in the interest rate but not the points, the lender may charge more points at a later time.However, there is also the chance the points for that interest rate drop, at which time the borrower may be allowed to lock in the points.If both the interest and the points are floating then they borrower can expect to pay more if either percent rises.Rate Lock While Purchasing If you are planning on purchasing a home, locking in a low rate can save you money for upgrades on your new purchase.First time home buyers can utilize the money they save from locking in a rate to buy furnishings and other first time home buying needs.Veteran real estate buyers can go on vacation with their added savings.Rate Lock While Refinancing Refinancing your home is all about the mortgage rate to many homeowners, which is why a rate lock is so important.If you have been tracking trends, you stand a good chance of locking in at the lowest possible amount.By locking in at the right moment, a person refinance their property can save money and not worry about which way rates go.Losing Your Locked In Rate There are times when a lender may not be able to honor the locked in rate.This may happen when there is a problem in processing and the rate lock goes beyond its expiration.Some locks allow for 30 days, and others for 60 days.However, there is often a point difference based on the term of the lock.If the term expires, the lender may not be able to honor the rate because they can no longer sell the loan to their investors.When a rate lock agreement is entered by the lender, they will often have a similar agreement with investors to buy the loan at the locked in rate.Once the agreement has passed the expiration date, there is not much a lender can do.A rate lock is often the best option when a borrower believes rates are at their lowest.Neither the mortgage lender nor the borrower knows what is best, but keeping up to date with mortgage rate trends can help to make better decisions.If a lock has occurred and rates drop, it is up to the lender to honor the new lower percent.Speaking with a mortgage banker is often a good way to track rates and available options.
Subscribe to:
Post Comments (Atom)
Post a Comment