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What is Rate Lock?
With the Lock Option, you will always know what your interest rate and mortgage payment will be. This option guarantees, that no matter what interest rates may do during your application process, your rate is guaranteed. There is no cost for the is option. Even better, no sleepless nights wondering what interest rates will do. Interest rate locks range from 15 days to 60 days.
Float Option
You cannot close a mortgage loan without locking in an interest rate. There are four components to a rate lock: 1. Loan program (30 fixed, 20 fixed, 15 fixed, 5 & 7 year balloon, etc.) 2. Interest rate 3. Length of lock period (15, 30 , 45 and 60 days) 4. Discount points (determined by borrower)e.
The longer the length of the lock, the higher the points of the interest rate. This is because the longer the lock, the greater the risk for the lender offering the lock.
Let?s say you lock in a 30 year fixed loan at 7% for 1 point for 15 days on March 2. This lock will expire on March 17 (if March 17 is a holiday or weekend the lock is typically extended to the first working day following the 17th). The lender must disburse funds by March 17th, otherwise your rate lock expires, and your original rate-lock commitment is invalid..
The same lock might cost 1.25 points for a 30 day lock or 1.5 points for a 60 day lock. If you need a longer lock and do not want to pay the higher points, you may instead pay a higher rate.
After a lock expires, most lenders will let you re-lock at the higher of the original price and the original locked price. In most cases you will not get a lower rate if rates drop.
What do you do if the rates drop after you lock?
Most lenders will not budge unless the rates drop substantially (3/8% or more). This is because it is expensive for them to lock in interest rates. If lenders let the borrowers improve their rate every time rates improved, they spend a lot of time relocking interest rates, since rates fluctuate daily. Also they would have to build this option into their rates and borrowers would wind up paying a higher rate.
Lock and shop programs
Most lenders will let you lock in an interest rate only on a specific property. If you are shopping for a house, some lenders offer a lock and shop program that lets you lock in a rate before you find the house. This program is very useful when rates are rising
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"Grand Oak Mortgage was great to deal with. Everytime, I spoke with them they were very upbeat and happy. It was a real pleasure dealing with such a great staff. They were very patient with me even when they had to explain things to me twice" - Mr. Passalacqua
"My Loan Officer was very helpful and all for us, she gave us insight into the ins and outs of the business" - Mr. & Mrs. Gonzalez
"Grand Oak Mortgage was very helpful, we want to thank them for getting us in our house. Very good company, who cares about their clients" - Mr. Zak
"With all the different loans programs available I didn't know the best program for me. With the help of my Grand Oak Mortgage Company Loan Officer I ended up with a loan program that saved me nearly $100/month on my house payment" - Mr. & Mrs. Wink
"The staff went up and above any of our expectations. Explaining everything step by step, very professional and helpful" - Dale Gohn & Kristie Tickle
"As a first time home buyer I was very unclear on what was involved in applying for a mortgage and what points and closing costs really were. Grand Oak Mortgage Company took the time to explain and educate me and my wife on the entire mortgage process" - Mr. & Mrs. Zlotnik
"Thank You Grand Oak Mortgage, my loan experience was all that you said it would be, fast and hassle-free" - Mr. & Mrs. Babcock
"Grand Oak Mortgage was great to deal with. Everytime, I spoke with them they were very upbeat and happy. It was a real pleasure dealing with such a great staff. They were very patient with me even when they had to explain things to me twice" - Mr. Passalacqua
"My Loan Officer was very helpful and all for us, she gave us insight into the ins and outs of the business" - Mr. & Mrs. Gonzalez
"Grand Oak Mortgage was very helpful, we want to thank them for getting us in our house. Very good company, who cares about their clients" - Mr. Zak
"With all the different loans programs available I didn't know the best program for me. With the help of my Grand Oak Mortgage Company Loan Officer I ended up with a loan program that saved me nearly $100/month on my house payment" - Mr. & Mrs. Wink
*We are proud to announce that all of our Loan Officers are S.A.F.E. act compliant.
