Cut off point in the Interest Rate Lock Agreement

Aug 6th, 2022
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Here are some common questions from our customers that may provide you with the answer you're looking for. If you can't find an answer to your question, please don't hesitate to reach out to us.
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The ideal time to lock your mortgage rate is when interest rates are at their lowest, but this is hard to predict even for the experts. Its worth noting that interest rates could decrease during your lock period. Should this happen, youll most likely have to pay the rate you initially locked in.
You can choose to lock in your mortgage rate from the moment you select a mortgage, up to five days before closing. Locking in early can help you get what you were budgeting for from the start. As long as you close before your rate lock expires, any increase in rates wont affect you.
If your interest rate is locked, your rate wont change between when you get the rate lock and closing, as long as you close within the specified time frame and there are no changes to your application. Rate locks are typically available for 30, 45, or 60 days, and sometimes longer.
You can lock your rate for anywhere from 30 days to 120 days, depending on the lender. Some lenders offer rate locks for free, while others charge a fee. Others only charge a fee when you extend the mortgage rate lock period.
How do locks affect discount points? On the day you lock your rate, you also lock the cost of any associated discount points. A discount point allows you to buy a lower interest rate by paying a percentage of your loan amount.
A float-down provision or float-down option is an agreement between you and your lender that can be made after you lock a rate. Youd pay an additional fee usually 0.5% to 1% of the loan amount to drop your locked-in rate to current mortgage rates.
Lenders may lock your interest rate when they issue your loan estimate. If they do, youll see the details on Page 1 of your loan estimate, which weve highlighted on the example below: If your lender discovers any changes to your initial application before your closing, your interest rate could change.
If your rate lock expires, you must relock it before closing. When relocking, the lender gives you the current market rate or the rate you locked initially, whichever is higher. For example, your initial rate of 6% expired, and rates have since increased to 7%, so your new rate after relocking is 7%.

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