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Mortgage - Lock-Ins
How do you lock in an interest rate?
Locking in a mortgage rate with a lender is one way to ensure
that same rate still will be available when you need it. Lock-ins
make sense when borrowers expect rates to rise during the next
30 to 60 days, which is the usual length of time lock-ins are
available. A lock-in given at the time of application is useful
because it may take the lender several weeks or longer to prepare
a loan application (though automated loan practices are cutting
this time dramatically). However, some lenders require borrowers
to pay lock-in fees to assure particular rates and terms. Be sure
to check that the rates and points are guaranteed and that your
lock-in period is long enough. If your lock-in expires, most lenders
will offer the loan based on the prevailing interest rate and
points. Lenders may have preprinted forms that set out the exact
terms of the lock-in agreement. Others may only make an oral lock-in
promise on the telephone or at the time of application.
Resources:
* "A Consumer's Guide to Mortgage Lock-Ins," published
by the Federal Reserve Board and Office of Thrift Supervision,
Washington, D.C.
Where do I get information
on lock-ins?
For information on lock-in mortgage rates, check out this brochure:
* "Consumers Guide to Mortgage Lock-Ins" from the Federal
Reserve Bank of San Francisco, Public Information Department,
P.O. Box 7702, San Francisco, CA 94120; or call (415) 974-2163
to order.
Do you advise a lock-in
on a home loan?
Locking in a mortgage rate with a lender is one way to ensure
that same rate still will be available when you need it. Lock-ins
make sense when borrowers expect rates to rise during the next
30 to 60 days, which is the usual length of time lock-ins are
available. A lock-in given at the time of application is useful
because it may take the lender several weeks or longer to prepare
a loan application (though automated loan practices are cutting
this time dramatically). However, some lenders require borrowers
to pay lock-in fees to assure particular rates and terms. Be sure
to check that the rates and points are guaranteed and that your
lock-in period is long enough. If your lock-in expires, most lenders
will offer the loan based on the prevailing interest rate and
points. Lenders may have preprinted forms that set out the exact
terms of the lock-in agreement. Others may only make an oral lock-in
promise on the telephone or at the time of application.
Resources:
* "A Consumer's Guide to Mortgage Lock-Ins," published
by the Federal Reserve Board and Office of Thrift Supervision,
Washington, D.C.
What is the value of a
mortgage lock-in?
Locking in a mortgage rate with a lender is one way to ensure
that same rate still will be available when you need it. Lock-ins
make sense when borrowers expect rates to rise during the next
30 to 60 days, which is the usual length of time lock-ins are
available. A lock-in given at the time of application is useful
because it may take the lender several weeks or longer to prepare
a loan application (though automated loan practices are cutting
this time dramatically). However, some lenders require borrowers
to pay lock-in fees to assure particular rates and terms. Be sure
to check that the rates and points are guaranteed and that your
lock-in period is long enough. If your lock-in expires, most lenders
will offer the loan based on the prevailing interest rate and
points. Lenders may have preprinted forms that set out the exact
terms of the lock-in agreement. Others may only make an oral lock-in
promise on the telephone or at the time of application.
Resources:
* "A Consumer's Guide to Mortgage Lock-Ins," published
by the Federal Reserve Board and Office of Thrift Supervision,
Washington, D.C.
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