A Smart Guide To A Great Mortgage Rate Lock

It would be great if everyone could get today's lowest mortgage rate. Whether you’re buying a home or refinancing, you will want to consider more than just getting "the best rate." Remember this when shopping around: the best price of a loan is not always the best rate on a loan. Buying a home at the Lake of the Ozarks is a major investment, so let's look at a few ways to get the best overall terms.

Mortgage Rate Lock

A mortgage rate lock is the commitment from a mortgage lender to honor a specific interest for a specific period of time. They also specify the accompanying number of discount points required to get access to that rate. Mortgage rate locks are in 15-day increments. The most common rate lock periods are 30 and 60 days. Generally, the longer your rate lock period, the higher your mortgage rate will be.

• A 15-day rate lock - Equal to 30-day mortgage rate - 12.5 basis points (0.125%)
• A 30-day rate lock - Equal to the "market rate"
• A 45-day rate lock - Equal to 30-day mortgage rate + 12.5 basis points (0.125%)
• A 60-day rate lock - Equal to 30-day mortgage rate + 25 basis points (0.25%)

Rate locks are available for longer periods than 60 days, but you will typically have to pay upfront for it. In some cases there are rate locks available for periods of one year or longer, these are typically used for new construction housing. Really long-term rate locks can keep you from getting the best rate when shopping. The amount of time for a short-term rate lock should at least be equal to the number of days required to close your refinance or home purchase loan. During the rate lock period, your mortgage lender at the Lake of the Ozarks is required to honor your mutually agreed mortgage rate.

Be Quick, So Your Rate Lock Does Not Expire

In the process of your rate lock, make sure to close your loan on time. If your rate lock expires, your lender is under no obligation to uphold the agreement any further and can cancel your mortgage rate immediately. Although your lender can cancel your mortgage rate, usually a rate lock extension is filed. A rate lock extension is an agreement between the lender and borrower to extend the original mortgage rate lock agreement. The cost of the rate lock extension can be paid for by either party, but it is not typically a cheap process. It is important to choose your rate lock term wisely, while considering what you can and cannot do in a timely manner. When a mortgage rate is agreed-upon between the lender and yourself, the mortgage rate does not have the ability to go up or down as future mortgage rates rise and fall.

Things To Know About Mortgage Rate Locks

There are a few guiding principles you will want to remember in respect to your rate lock.

• Get your rate lock agreement in writing.
• Rate locks are mortgage loan specific. If you switch from a one type of loan to another, your rate will have to be locked in again.
• Know the rate lock policy of your lender. You may be able to lock in your rate once your application is complete, or you may have to wait until after the appraisal has been completed. This can make a difference and affect your rate.
• Know the lenders policy on a rate lock extension. Which party will be paying for the extension?
• Know if your lender charges a rate lock fee. Your fees will typically be refunded at closing. However, you may not get fees refunded with the longer term rate lock.

You will need a rate lock in order to close. When you are refinancing or buying a home, make sure you know the current rates and get the best possible rate for you.

If you have questions about rate locks during the process of home buying or refinancing give your local Lakelender, Michael Lasson a call at 573-746-7211. When it comes to your Lake of the Ozarks home financing needs, I'm here for you every step of the way, to answer any questions that you may have. I'll discuss financing options, offer competitive interest rates and back it up with the first class service you deserve!

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Michael Lasson

Sr. Residential Mortgage Lender

NMLS #: 493712

2265 Bagnell Dam Blvd, Suite B

PO Box 1449

Lake Ozark, MO 65049

Direct:  (573) 746-7211

Cell: (573) 216-7258

Fax:(573) 693-9141

Email:  mlasson@fsbfinancial.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.