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the value of mortgage lock-ins |
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What is the value of a mortgage lock-in?
Locking in a mortgage rate with a lender is one way to ensure that same rate still will be available when you need it.
Lock-ins make sense when borrowers expect rates to rise during the next 30 to 60 days, which is the usual length of time lock-ins are available.
A lock-in given at the time of application is useful because it may take the lender several weeks or longer to prepare a loan application (though automated loan practices are cutting this time dramatically).
However, some lenders require borrowers to pay lock-in fees to assure
particular rates and terms. Be sure to check that the rates and points
are guaranteed and that your lock-in period is long enough. If your
lock-in expires, most lenders will offer the loan based on the
prevailing interest rate and points.
Lenders may have preprinted forms that set out the exact terms of the
lock-in agreement. Others may only make an oral lock-in promise on the
telephone or at the time of application.
Resources:
* "A Consumer's Guide to Mortgage Lock-Ins," published by the Federal
Reserve Board and Office of Thrift Supervision, Washington, D.C.
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Last Updated ( Wednesday, 30 July 2008 )
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