The Cost of Your Mortgage Loan
Obtain a Written Agreement
Most lenders will commit, in writing, to a mortgage interest rate for a specified time period while your loan application is processed - this is known as "locking-in" the rate.
The following lock-in
options are common among lending institutions. Be sure to ask the mortgage
lenders you are considering which lock-in options they offer.
It is not unusual for a
lender to charge a fee for locking-in an interest rate and points. This fee
may vary depending on the amount of time you want to lock-in the rate (the
The fee may be charged when you lock-in the rate (and is rarely refundable if you withdraw your application, if your credit is denied or if you do not close on the loan) or it may be included in your closing costs. The amount of the fee and when it is charged will vary among lenders.
Most lenders will offer
lock-in periods of 30-60 days. Some lenders may only have short lock-in
periods. And still
others may offer a longer lock-in period (expect higher fees for longer
The lock-in period should
be long enough for the loan approval process and to allow for any other
contingencies that may delay closing.
The Lock-in Expiration Date
If unexpected circumstances prevent the loan from settling prior to the last day of the lock-in period (whether caused by you or others in the process - including the lender), you lose the interest rate and points that were locked. Prevailing interest rates and points are usually charged under these circumstances. Be sure to ask your lender before you lock-in what interest rates and points will be charged if the loan is not closed before the lock-in period expires.
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