approved.”
Different lenders will have different rules, and this could also be one of the determining factors when you’re doing your home loan shopping regarding which lender to ultimately select. Be absolutely clear about the lender’s mortgage rate lock rules. If you’re unsure about something, then ask. For example, ask if your locked rate can or will change in certain situations. For example, says Bankrate.com, find out if the rate would change “if mortgage rates drop, if you change from a 30-year fixed-rate mortgage to an FHA loan.” Keep in mind that locking in a low interest rate — even though lower rates help save money — can often come with a cost. For example, some lenders will charge a mortgage rate lock deposit upfront, and others will offer a rate lock in exchange for a slightly higher interest rate than the current prevailing rate, or require the borrower to pay a certain number of points, which could be fixed or floating. “Fixed points refer to a set number of points; with floating points, the interest rate is locked in, but the number of points that must be paid to guarantee the rate can change over time,” explains Smith. This is why it’s important to understand your lender’s rules regarding mortgage rate locks. Also, you must be absolutely sure that your mortgage rate lock will last long enough to cover the entire home-buying process from start to finish (closing). Some closing processes can be drawn out, lasting a month or even longer. If you suspect this will be the case for you, have a chat with your lender about locking down a rate for the full length of that drawn-out process without paying penalty fees. Often, if you talk to the lender ahead of time, you can avoid paying for mortgage rate lock extensions later on.
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