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Lock-Ins - Q & A
| Q: |
How do you
lock in an interest rate? |
| A: |
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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| Q: |
Do you
advise a lock-in on a home loan? |
| A: |
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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| Q: |
Where do I
get information on lock-ins? |
| A: |
For
information on lock-in mortgage rates, check out this brochure:
* "Consumer?s 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. |
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| Q: |
What is the
value of a mortgage lock-in? |
| A: |
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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Copyright 1999 Inman News Features
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