Lender and Loan Lock Pointers!
A lock-in is a lender’s promise to hold an interest rate and points for you for a specified period of time, generally 3-60 days. Not all loan locks are free,. Some lenders will charge you a fee up-front or at closing settlement. Depending on the lender, you will lock in the interest rate and number of points you agree to pay either at time of application, during processing of the loan, at time of loan approval, or later.
If interest rates are rising, it is always a good idea to lock in the loan during the application time so that the lower rate is locked and secured. On the contrary, if rates are dropping, it would be best to wait and lock in the interest rate during the loan process.
Considerations before choosing a lender or loan-lock:
1) Check if the lender offers a lock-in of the interest rate and points?
2) Will the lock-in be in writing?
3) When can you lock in rates and how long will the lock-in be effective?
4) Check on the lender charges/fee for a lock-in?
5) If you have locked in a rate and interest rates drop or go down, can you re-lock in at the lower rate? If so, is there an additional charge? How much?
6) Check with your lender and see if you can float your interest rate and points now and lock-in at a later date?
7) What is the lender’s average time for processing loans (30-60 days)?
8) Check on the lender's production volume? Heavy volume can mean slow turnaround or weak performance.
9) How much is the fee if the lock-in expires before settlement?
10) If you don’t settle within the lock-in period, will the lender refund the application or lock-in fees?