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Extended Rate Locks – What They Are & Is One Right For Me?

As mortgage rates fluctuate, many home buyers are considering a mortgage rate lock which enables them to freeze or “lock” their mortgage rate at a specific interest rate for a specified amount of time. This protection against future rises in mortgage rates provides you with the comfort of knowing what your mortgage payment will be since your rate is confirmed. Lacrosse Homes’ financing partner, Redwood Mortgage, will explain the options available to you as you explore all your mortgage needs. Here is a quick primer on Extended Rate Locks:

WHAT IS AN EXTENDED LOCK?

The Extended Lock Program is offered under Fannie Mae, Freddie Mac, FHA, VA and USDA products for new construction loans only. (Jumbo loans are not eligible) It allows borrowers to lock an interest rate for a period of up to 365 days with a rate adjustment. An upfront refundable fee is due at the time of rate lock.

Eligible Products:

• CONVENTIONAL FIXED RATE – Fannie Mae and Freddie Mac

• GOVERNMENT FIXED RATE –    FHA, VA, and USDA

WHAT FEES ARE ASSOCIATED WITH MORTGAGE RATE LOCKS?

Extended locks have fees which are known as points. Upfront fees require to be collected from the borrower at the time of locking the loan. The amount or number of “points” paid depends on the product you’re using i.e.: fixed rate with no float down, ARM rates, etc. Our mortgage partner will work with you to determine the best product, commitment period, and points to lock that rate. NOTE: upfront fee does not apply to the price or closing, it must be received prior to lock execution. Other requirements prior to the authorization may include:

Borrower must sign “Intent to Proceed”
A credit card is mandatory for payment
Borrower’s credit card validation is needed prior to lock. The upfront fee is refundable at closing or if the loan is denied. The upfront fee is NOT refundable at closing if withdrawn, canceled, or changed to a product that is not eligible under the Extended Lock Program. 

WHAT IS THE LOCK PERIOD?

You can lock your rate for up to 365 days. Pricing is based on 60-day pricing plus the rate adjustment for the applicable lock period. Rate adjustments are subject to change based on market conditions.

CAN I EXTEND MY LOCK?

Lock extensions are permitted up to a maximum of 30 days on either the initial lock or float down option. The borrower is responsible for any Applicable Lock Extension Fees. The lock extension inquiry must be made Prior to the lock expiration. If the lock extension is desired after the Expiration Date, then the loan will be subject to a relock at “worst case” pricing. NOTE: Extensions are not allowed once the loan has been relocked.

The above information is subject to change as the industry and requirements associated with this and other mortgage products change frequently. Certain mortgage lock programs are not available in our Ellendale community. Please CONTACT US for ADDITIONAL INFORMATION.