GUIDE TO LOCK-INS
The interest rate market is subject to constant swings without advance notice. Locking a rate protects you from the time that your lock is confirmed to the day that your lock period expires.
Please note that we cannot be held responsible for any rates that may change prior to our written confirmation.
A lock is an agreement by BOTH you, the borrower, and the lender and specifies the number of days for which a loan's interest rate and points will be guaranteed by the lender. Should interest rates rise and you have met all of your conditions the lender is then obligated to honor the rate that they have locked on your behalf. Should interest rates decrease, the lock must still be honored by you.
When Can I Lock?
You can lock a rate once your application information has been reviewed. In some cases, your application will provide all the information needed and you will have the option to lock at the time you apply. Otherwise you will be invited to lock after you have returned your package and your documentation and credit information has been reviewed.
We recognize that you may not be available to request a lock during this time period; if so, please contact your Loan Agent for assistance. We are working with all of our lending partners to extend the lock-in period, and appreciate your understanding.
Lock-ins will vary from 10 days to 180 days. It costs more to lock in for extended periods of time.
Until we confirm in writing that your
rate lock has been accepted by our lender, your loan
is not locked in. When you request a lock, we
contact our lender partner and secure the lock on
What are Points?
Points are up front mortgage interest fees paid on a loan to reduce the initial interest rate. For example, a one-point loan will always have a lower interest rate than a zero-point loan. Therefore, paying points is a trade-off between paying money now versus paying money later. A Point represents 1% of the loan amount, and depending on how long you plan to stay in your home, paying points can save you a lot of money in the long run. It takes about five to seven years to recoup the cost of paying a point upfront. Here's the math. Let's say you take out a $100,000 30-year fixed mortgage, and you have the option of either paying 6% with no points or 5 3/4% with one point. With the 6% mortgage, your monthly payment will be $600. And with the 5 3/4% loan, it would be $584, a savings of $16 per month. After about 62 months, or a little over five years, you would have recouped the $1,000 point you paid upfront. And then you would start to benefit from the lower monthly payments.
No Point Loans
There are many reasons for choosing a "No Points — Par" Mortgage. The following outlines some of the most common reasons borrowers choose this option.
- Lack of cash to close escrow. If you are purchasing a new home and are short on cash for the down payment, a "No Points — No Closing Cost" mortgage can save you up to thousands of dollars.
- If the estimated time you will be staying in the home is less than 4 years, while paying points and closing costs will give you a lower interest rate and a lower monthly payment, it typically takes about 4-5 years of living in the property to realize the benefit of the lower payment when weighed against the total cost of the points.
- Lack of equity in the property when refinancing. A similar situation as portrayed in item "1". If it makes financial sense to refinance your mortgage, but you do not have enough equity in the property to add your closing costs into the new mortgage - a "No Points — No Closing Cost" mortgage could make great sense.