You’re ready to lock your rate – but how long should you lock it for, and how will it affect you? If Interest rates are going down it’s one thing, but spikes are another. Here’s what you need to know about the finer points of locking your rate and what happens if your locked rate nears its expiration and you haven’t closed.
Rate Lock Basics
When you lock a rate, the interest rate is frozen for a typical time period of 30, 45 or 60 days. At Sammamish Mortgage, we don’t charge a fee to lock your rate. You’ll be asked to simply provide a credit card to pay for the appraisal on the home you are under contract on. Longer locks are available on most loan programs; however, the premium to lock for more than 60 days usually isn’t worth the added cost.
Extending rate locks
Your rate lock is designed to protect you from rising interest rates. If you haven’t closed yet, and your lock is going to expire, you can extend your lock for a fee which varies by program.
Your Loan Officer can advise you on the potential costs for extending the lock. If the delay in your closing is due to our delay we will extend the lock at no additional charge.
In order to avoid any issues with lock extensions it is advisable to be proactive from the very beginning of the process and provide requested documents as quickly as possible.
If rates have gone up, and the delay in closing is on the lender or mortgage bank, you won’t have to pay to avoid the higher rate (assuming you’re working with a reputable lender.)
However, if delays in closing are due to problems on your end or an issue with the property, sellers, etc., you’ll have to pay a fractional point increase to get your lock extended (subject to lender variances.)
Increases are usually somewhere in the neighborhood of the following:
- 7 days = .125 Pts
- 15 days = .250 Pts
- 30 days = .500 Pts
In rare cases, the interest rate will drop significantly after you lock. If your application is fully approved and the appraisal complete, and the rate has dropped more than at least .25%-.375% you may be eligible for a one-time renegotiation. In this situation you can usually get a rate somewhere between what you have locked and what’s available at the time of the rate renegotiation.
Best plan for locking your rate
It’s best to line up your rate lock along a planned timeline that assumes closing will be within the specified time period. This is the best way to get the rate you want without having to pay extra for it in case of rising rates and delayed closing dates.
Your Sammamish Mortgage Loan Officer Can Help You Start the Preapproval Process Today!
We’ve fine-tuned the preapproval process to make it one of the easiest experiences you’ll have in the whole home buying process. Buying a home should be fun and exciting, not stressful. Get preapproved today!
Sammamish Mortgage has been in business since 1992, and has assisted many home buyers in the Pacific Northwest. If you are looking for mortgage financing in Washington State, we can help. Sammamish Mortgage offers mortgage programs in Colorado, Idaho, Oregon and Washington.
Contact us if you have any mortgage-related questions or concerns. If you are ready to move forward, you can view rates, obtain a customized instant rate quote, or apply instantly directly from our website.