Rate lock FAQs for Denver homebuyers.
The real estate market in the Denver Metro area hasn’t slowed down yet, with the area crushing home sales records in multiple categories during January 2022.
At the same time, financial experts predict that there will be at least one — and possibly several — interest rate increases during 2022. This is a great time to learn about rate locks, which can potentially save you money on interest payments over the course of your home loan.
Let’s start by defining a rate lock: This is an agreement between a lender and borrower that a specific interest rate will be charged if the loan closes before the end of the lock period.*
Q: How long will the rate be locked in?
A: Lock lengths typically range from 14 days to 60 days, with multiple options in between.
Q: How will I know when to do a rate lock?
A: In most cases, a rate lock agreement is made after the application has been accepted, but before underwriting thoroughly reviews your credit history, income, property appraisal, and other details.
Q: How much does a rate lock cost?
A: That varies by lender. Be sure to ask your loan officer about any associated fees with your rate lock.
Q: What is a lock extension?
A: If the loan doesn’t close before the lock expires, you may be able to request an extension. This can depend upon the lender’s guidelines and the reason for the missed closing date.
Q: What happens if rates drop below my locked rate?
A: Some lenders, including HMA, offer a “float down” option. This would allow you to take advantage of a lower rate, while remaining protected against rate increases.
At HMA, we’re committed to educating our clients so they can choose the right loan for their unique needs. Contact us today!
* Pricing for long-term rate locks are based on Day pricing with specific add-ons determined by the lock term chosen. Float down option is based on current pricing plus a float down fee. Terms and conditions apply. Talk with your Loan Officer for details.
At the same time, financial experts predict that there will be at least one — and possibly several — interest rate increases during 2022. This is a great time to learn about rate locks, which can potentially save you money on interest payments over the course of your home loan.
Let’s start by defining a rate lock: This is an agreement between a lender and borrower that a specific interest rate will be charged if the loan closes before the end of the lock period.*
Homebuyer FAQs
In addition to the basic definition provided above, we wanted to provide answers to some questions you may have.Q: How long will the rate be locked in?
A: Lock lengths typically range from 14 days to 60 days, with multiple options in between.
Q: How will I know when to do a rate lock?
A: In most cases, a rate lock agreement is made after the application has been accepted, but before underwriting thoroughly reviews your credit history, income, property appraisal, and other details.
Q: How much does a rate lock cost?
A: That varies by lender. Be sure to ask your loan officer about any associated fees with your rate lock.
Q: What is a lock extension?
A: If the loan doesn’t close before the lock expires, you may be able to request an extension. This can depend upon the lender’s guidelines and the reason for the missed closing date.
Q: What happens if rates drop below my locked rate?
A: Some lenders, including HMA, offer a “float down” option. This would allow you to take advantage of a lower rate, while remaining protected against rate increases.
Meeting your mortgage needs
Although we can’t predict the future, nearly everyone in the real estate industry expects rates to go up in 2022 and we want to help you be a knowledgeable homebuyer who is well-prepared.At HMA, we’re committed to educating our clients so they can choose the right loan for their unique needs. Contact us today!
* Pricing for long-term rate locks are based on Day pricing with specific add-ons determined by the lock term chosen. Float down option is based on current pricing plus a float down fee. Terms and conditions apply. Talk with your Loan Officer for details.