Always Lock Your Mortgage Rate

A “mortgage rate lock” is essential to ensure you actually receive the interest rate you are quoted by a bank or mortgage broker. Often times you will you be presented with a mortgage rate quote, but it means very little until it’s actually secured, or “locked,” by a bank or lender.

When you lock in a mortgage rate, you are guaranteed that interest rate, assuming your loan actually qualifies under said lender or bank’s guidelines. By locking a loan, you secure a specific interest rate along with certain terms, including the mortgage index and margin the program is tied to, the prepayment penalty if any, and the initial, periodic, and lifetime caps.

Rate Lock Period

When you lock your loan, you must also choose a rate lock period, which can range from 7 days to 90 days or even longer. The most common lock term is anywhere from 15-45 days, which is the average time it takes for a loan to close.

It’s important to pick the appropriate length of time to ensure you get the loan closed before the lock expires, without subjecting yourself to additional fees.

Either way, you will always have the opportunity to extend your rate lock at a relatively small cost if the process gets delayed, which it often will!

When to Lock Your Mortgage

Some borrowers may choose to lock in a mortgage rate at the initial time of the loan application, before the loan is even submitted to the underwriting department. This is known as a “pre-lock,” and ensures the interest rate is set before the loan is even underwritten.

It can be helpful to pre-lock your mortgage rate if the debt-to-income ratio is close to the maximum, so if there are any interest rate fluctuations, the DTI won’t be exceeded. In may also be a smart move if mortgage rates are rock-bottom and there is little expectation for rates to improve further.

Others may float their mortgage rate and lock their mortgage at the last minute, effectively gambling on the hopes of mortgage rates improving later in the loan process. If you feel mortgage rates have more room to fall, this could be the way to go. But as mentioned, it’s a gamble and there’s no guarantee.

What If My Rate Lock Expires Before Closing?

As mentioned, mortgage locks don’t last forever, they come with a set time period.  Assuming you lock your rate in early on, there’s a chance the rate lock period could be exhausted, at which point the lock could expire.

If the rate expires before loan closing, you’ll need to get it re-locked.  This could entail worst-case pricing (assuming mortgage rates have risen) and a relock fee.  For example, if rates went down, you’d be stuck with your old, higher rate and a relock fee to boot.

Ask for a Rate Lock Extension

But typically the lender will keep an eye on the rate lock period and issue a “rate lock extension” before the lock actually expires.  Doing so will ensure you get to keep the rate you originally signed up for.

However, rate lock extensions don’t come for free either.  If it wasn’t the lender’s fault, the cost of the rate lock extension could run you several hundred dollars or more, depending on the associated loan amount.

It is calculated as a percentage of the loan amount.  So you might be charged .125% for a 7-day lock extension, or .25% for a 15-day extension.  These fees will vary from lender to lender and could be more or less.

The higher your loan amount, the higher the cost.  On a $200,000 loan amount, you’d be looking at a cost of $250 or $500 to extend the lock period, respectively.

While that fee sounds like a raw deal, holding onto a rate that is an .125% or more lower could save you a lot of money over the term of the loan.  In other words, it’s better to get the extension than let the lock expire for fear the rate could rise.

If the delay happens to be the lender’s fault, they will generally offer a free rate lock extension for seven days out of good faith.  This should be enough to get the loan closed without any cost to you.  Even if it is your fault, you might be able to get a few free days to ensure the loan closes before the lock expires.

In any case, you can try to negotiate a lock extension in your favor, and ask them to extend it for free if you feel it was out of your hands.  They may work with you to retain your business and avoid you going elsewhere.

Get the Mortgage Lock in Writing

Either way, it’s important to stay on top of your mortgage rate lock, and to make sure you have the rate and terms in writing. Never just assume a mortgage broker or bank has locked your interest rate.

They may say your rate is this or that, or that it’s locked, but in actuality they may be floating your rate in the hopes of getting a better commission or yield spread premium. Or perhaps you’ve been misquoted, and they’re praying the mortgage rate will come down to what they originally quoted you.

I’ve seen that happen a million times. Brokers will go into panic mode if they failed to lock a rate initially, often after quoting their borrower a guaranteed rate. They’ll call the mortgage lender each day to see how mortgage rates have moved, and nervously push on day after day, waiting for the moment rates fall to the level they were originally quoted.

Sometimes brokers will settle for a lower rate with less commission to them, but often they’ll simply tell the borrower the rate is higher for some reason. And the borrower will just have to accept it because they’ve spent so much time working on the loan that they’ll just want to get it done.

Watch Out for Changes

Some loan officers and brokers may even change the original terms they quoted you to get a lower rate. Such as raising the margin, adding a prepayment penalty, or changing indexes, caps, or even loan programs.

All that said, make sure you know exactly what you’re getting when it comes to the interest rate and terms associated with your mortgage rate lock. Any mistakes here will lead to higher monthly mortgage payments for years to come, and a major headache if you fail to jump on a good rate early on.

Sure, you can gamble, but if you’re happy with a certain interest rate, might as well not take chances. And again, always get your lock confirmation in writing from the bank or broker before you proceed with the deal! This cannot be stressed enough!


100 Comments

  1. Dyanne July 24, 2012 at 8:31 am -

    We locked at 3% in May (15 year fixed). The loan is dragging on and now rates are are a little lower (2.875%) but the lender wants to charge us to extend the lock! What are my options at this point?

  2. Colin Robertson July 24, 2012 at 9:38 am -

    Unfortunately lenders are super backed up at the moment, so even seemingly long rate locks are expiring.

    Sometimes when rates drop you can extend your lock for free, seeing that you’re taking an above-market rate now.

    If that’s a no-go, and you think you can do better elsewhere, you can submit your loan with another lender and take advantage of today’s lower rates.

    The downside to that is playing the waiting game AGAIN, and possibly paying double fees on certain items, all for a measly eighth of a point.

  3. Brorrower August 27, 2012 at 7:52 pm -

    In an atmosphere of declining rates, I refused to pay the lock fee. This approach was unconventional and surprised the originator. By the time they processed my app, the rate had dropped. Also, you can lock, then if the rates drop, you can play hard ball and threaten to walk if they don’t honor the current rate. It’s inconsiderate and will rankle everybody on the lender side, but you can do it. I guess there is a risk that they could tell you on principle to get lost, and refuse your business.

  4. 1st timer April 29, 2013 at 12:46 pm -

    Hello im a first time home buyer and today the rate that was quoted to me was 3.25% which has been the same since i started and points equal about $1,470 right now. Would it be best to lock or continue to float? HELP HELP HELP!!!!

  5. Colin Robertson April 29, 2013 at 3:52 pm -

    Hey 1st timer,

    It depends on a number of things. Are you happy with the rate? Are you worried it will move higher before closing? Are you closing soon? Generally, most people lock within 15 days or so of their closing date, especially if they are happy with the quoted rate. If you don’t lock, you risk your rate moving higher (or possibly lower). The question is do you want to take the risk?

    Learn more: http://www.thetruthaboutmortgage.com/locking-vs-floating-your-mortgage-rate/

  6. Dusty June 26, 2013 at 5:35 pm -

    I am a first time home buyer using a CHFA advantage plan. I was officially under contract last Monday. (16 june) My lender failed to lock me until Yesterday (tuesday 25 of june) my rate is over 1% higher than the rate I was quoted. He said it was company policy to wait to lock until the appraisal is done. I called and checked with his main office and this is not the case. He then said that market volatility is not his fault and he does not have a crystal ball to predict these things. The thing is it took me calling him and emailing him most of the day on Monday, a full week after I was under contract, to get him to lock me in. Now rather than low 4% I am at 5.25%. Do I have any recourse in this matter or am I simply stuck with htis rate?

  7. Colin Robertson June 27, 2013 at 12:05 am -

    Dusty,

    Check your disclosures regarding the rate lock…you’ll probably see something saying the rate is subject to change unless locked. If you feel he dropped the ball, you can always shop around and go with a different lender, but you’ll need to start the process all over again. Alternatively, you can argue for a lower rate than what he locked you at, simply by “negotiating,” using his failure to lock before rates rose as your argument.

  8. Dusty June 27, 2013 at 3:44 pm -

    Ok. Thank you. I just feel like I have no leverage to negotiate anything. I realize 5.25 is still a good rate, but last monday, when I feel we should have locked was far better at 4.375.

    Thank you for your time

    Dusty

  9. 1st time home buyer July 5, 2013 at 3:25 pm -

    Hello all,

    I worked out a mortgage rate at 4.65% on July 1st and my broker wrote in an email that he submitted the rate for locking. After not hearing from him for several days I decided to call him and check on the lock. He said that he actually never submitted the lock and now my rate is 5.2ish%. Is there anything I can do since he initially said he submitted the lock request at 4.65%? Please help!

    Thanks,
    Tom

  10. Andrew Martinez July 6, 2013 at 10:40 pm -

    Dusty,

    If it helps at all rates got much worse on Friday. However, not sure how you are 1.25% higher if your loan was locked on June 25th.

  11. Colin Robertson July 8, 2013 at 12:53 pm -

    Tom

    You need to get the lock confirmation in writing. Not just a verbal that he submitted a lock request. If the loan isn’t actually locked, a request doesn’t mean a whole lot.

  12. Colin Robertson July 14, 2013 at 3:04 pm -

    Unfortunately, this is a very common scenario at the moment. This type of thing happens all the time, you just never hear about it because rates are typically a lot less volatile. Generally, borrowers may find that their rate wasn’t locked, and that rates went up a mere eighth or quarter of a point. Now that rates are going berserk, a lot of borrowers are getting a very rude awakening. Now is probably the most important time in recent history to ensure your rate is actually locked, assuming you want it to be locked! For the record, you should have signed a disclosure regarding the interest rate early on in the process. Check your paperwork and plead with the broker to offer you a lower rate if possible.

  13. Al August 7, 2013 at 7:40 am -

    We received a verbal quote on a locked in rate of 4.875% then the mortgage processor emailed and said he had locked the rate in at 3.875% for 20 years. Now he says that was an error in the email and that the rate is 4.875%. Is he legally bound to the 3.875% he quoted in writing?

  14. Colin Robertson August 7, 2013 at 10:16 am -

    It sounds like they just made a typo if you all agreed on the 4.875% rate.

  15. Diane April 18, 2014 at 9:43 am -

    I am getting a mortgage thru a local bank and told my lender to lock my rate…then the seller dragged their feet and I have been told I have to pay to re-lock my rate because it will be past 30 days (even though rates have gone down a little since). I don’t mind paying the higher rate, but paying to re-lock it seems ridiculous. Why would a bank do this–can’t I just go somewhere else? I don’t want to because the service has been great and I appreciate it, but I am already paying a 3k origination fee for them to write the loan and I don’t want to be an idiot.

  16. Colin Robertson April 18, 2014 at 10:03 am -

    Diane,

    I’m assuming they want you to pay for a rate lock extension, which is perfectly normal. And paying for an extension if it wasn’t the lender’s fault is normal too. However, that doesn’t mean you can’t negotiate or fight the fee, or ask for an exception, especially with rates lower today than when you locked. You could also ask for a float down to the new lower rate for a cost. A fee might sound bad now, but a lower rate for the life of the loan should save you money long-term. You could also shop around and see what other lenders are offering and tell your lender that Bank XYZ is offering a lower rate, just to make your case a little stronger.

  17. Maureen June 18, 2014 at 12:02 pm -

    Hi Colin,
    We are in the middle of refinancing; I have submitted all necessary paperwork which has been submitted to underwriting. Our mortgage guy advised rates are going down; we are refinancing to get cash out and refinance at or <4% (currently our loan is at 4%, our refi would be to apply for jumbo loan and eliminate PMI). We received a call from the appraiser asking to set up an appointment; but our mortgage guy has not locked in our interest rate yet. Does it matter when we get the home appraisal done? Ideally we would need at least another week before having someone come out as as we are doing remodeling in our backyard.

  18. Colin Robertson June 18, 2014 at 3:04 pm -

    Maureen,

    Most loan reps will advise you to get the appraisal sooner rather than later to ensure you get the value you need to actually get the deal done, but obviously not while the house is being remodeled. If you’re concerned about the rate not being locked, you can ask about locking for a longer period of time to cover the time it takes to do the appraisal. Or just listen to your rep and hope rates stay flat or drop.

  19. Maureen June 23, 2014 at 10:34 am -

    Thanks Colin.

  20. LJK August 3, 2014 at 7:02 am -

    Hi Colin,
    My husband and I are building a new home and we locked our rate through Oct 24, 2014 and we will be fine with making that date. On our original application which we agreed upon a 5% 30 yr fixed rate with an opportunity to relock 25 days from closing. The application in the GFE show a 0.5% discount rate equal to $1400.

    Our loan was approved but from this past winter until now, we got married so they asked us to reapply due to the status change. Upon review of the new application, the discount rate is now listed as 1.0% or $2800 and the other fees within the GFE are $917 higher.

    We attached the original app with the 0.5% discount rate and sent an email to the broker and admin staff inquiring about the rate and fees. It is over a weekend and we have not heard back.

    Is it feasible/legal for the terms on a loan to change if we NEVER agreed to any change? What is our recourse? We close in just over a month. Can we change brokers? What would we be liable for besides the application fee?

    We appreciate your feedback.

    L & R

  21. Colin Robertson August 4, 2014 at 9:10 am -

    LJK,

    The loan was approved, but not originally locked correct? Rates change daily so if you wanted that same rate locked, it may cost more on a certain day, as it seemed to in your situation. Ask them why it went from 0.5% to 1% and let me know. And which fees increased.

  22. Mimi September 16, 2014 at 6:32 pm -

    A lender will not allow me to lock in the rate until I have a specific property picked out. Does this make sense? I thought I could lock int he rate for up to 90 days without a known property. Why else would I get pre-approved vs. pre-qualified?

  23. Colin Robertson September 16, 2014 at 9:03 pm -

    Yes that makes sense…lenders don’t want to lock your rate if you don’t even have a purchase contract. There’s a good chance it’ll take a while to find a property in this market. As far as getting pre-approved, it’s a smart thing to do to ensure you can actually get a mortgage. Plenty of people think they’re qualified, only to find out that they’re not. It’s not really about the rate lock at all.

  24. Michelle October 7, 2014 at 11:37 am -

    Hi Colin,

    My husband and I locked in our rate at an appropriate time (after purchase contract and after passing appraisal), but it is now up for expiration. The reason for passing the 30 day date is debatable…the sellers took too long to return some bank documents that needed their signature and also the bank has been slow at processing the paperwork. Regardless, the bank will not admit fault and want to charge us the .25% extension fee for 15 days. However, they can’t even guarantee us that they can close in that 15 days, which would require another .25%.

    My question for you is…we originally locked at a higher than market value rate in order to receive a credit at closing. Rates were at 4.0% at the time of our lock and we took 4.25%. So, if we instead choose to let it expire, what will happen to our closing credit? Will the bank take that away? I am hoping that, for example, if rates are still at 4%, we get the same credit at closing, and if rates are at 4.25% or higher, we would get no credit, etc. Also, if we do let it expire, can we float until closing or do most banks require you to lock again before closing?

    Our loan officer is quite the salesman and he is not giving us a straight answer. We are in purchasing in NY. Thanks for your help.

  25. Colin Robertson October 7, 2014 at 11:07 pm -

    Michelle,

    Theoretically you could let the lock expire and then relock, but you’d be subject to worst-case pricing. And even if pricing is exactly the same, many lenders charge a relock fee. So floating doesn’t really work because they’ll just relock you at worst-case pricing, and tack on a relock fee to boot. So in a sense the lock extension fee is the safer bet to keep your original rate and credit in place. Even though pricing is the same today, or tomorrow, things can change quickly and without warning. However, if rates (and your credit) really are the same as the day you locked and some of the delay is the fault of the lender, they could extend the lock for free (out of good faith) and simply to get the deal done so they make their money. If it takes another several weeks and it’s not their fault, you shouldn’t expect them to cover the cost of extensions. Like anything else in the mortgage world, it always helps to negotiate and plead your case. They shouldn’t want to lose you as a customer, or lose potential referrals from you in the future, so making some concessions now could be a smart move.

  26. Joseph October 8, 2014 at 9:45 am -

    I have my loan tru cashcall, I closed last year at 4.35 – on a jumbo 540K loan – they called me today and offered to reduce my rate by 1/4 of percent (result in $100 reduction a month) at no cost – closing a new loan in Dec I agreed but I am a bit sceptic – why on earth they call and offer this? they said there is no catch – I just need your opinion – what do you think ? should I go for it ? they said they can ever give me 3.99 but I have to pay 1.xx point close to $2000 in closing fees and that wont make sense for me ! if rates go lower I can always re finance

    Please advise

  27. Colin Robertson October 8, 2014 at 4:43 pm -

    Joseph,

    Not sure how many people would refinance just to reduce their payment by a quarter percent, or $100 a month, but to each their own…it’s your decision. Keep in mind that it extends your loan term if you’re actually interested in paying off the loan. And I don’t know what type of loan it is. Paying $2,000 in closing costs means you’d need to hold the loan for a certain number of months before breaking even on the upfront cost, which could hurt if you refinance a third time. Anyway, they’re probably offering it because they make money by selling your loan to investors.

  28. Josephmalkom October 9, 2014 at 2:24 pm -

    I have been only paying ofr 1 year – my current rate is 4.35 My new rate will be at 4.125 – I noticed I can get 3.99 too ! how can I get a better deal ? do they negotiate (they hardballed me yesterday) they are forcing me to sign the documents today

  29. Colin Robertson October 9, 2014 at 4:24 pm -

    If you want to see if there’s a better deal, shop around. Inquire with other lenders about rates with no fees.

  30. ladybug26 October 15, 2014 at 10:35 am -

    I am a first time home buyer and my lender asked me casually if I wanted to lock my rate with no explanation of what this meant. I said okay thinking that I could change this later. I found out, the next day, after asking my dad about it and he stated that today is a better day to lock the rates as it is significantly lower than the 4.25% that I locked yesterday. When speaking to the lender they stated that they cant change anything and also threw in my face that they are helping with 2k in closing costs. I feel as though I was taken advantage of because I wasn’t aware of what I was okaying. Is there anything that I can do at this point?

  31. Colin Robertson October 15, 2014 at 11:29 am -

    If you agreed to lock, you should accept some responsibility. Had rates gone up you probably wouldn’t be too upset. But seeing that they’ve dropped a good amount, you can certainly argue that they didn’t explain the lock process clearly to you and ask that they speak to the lock desk about lowering your rate in good faith. The squeaky wheel tends to get the grease in the mortgage world so negotiating and pleading your case is key. The $2,000 they’re giving you is probably just the lender credit for the given rate, it’s not a gift.

  32. Jig October 21, 2014 at 8:25 pm -

    I have signed a rate lock terms with my lenders 2 months ago, with a verbal commitment that if rates drop then they will honor the rates. today the rates drop more than 0.5%. I had signed for 3.57 and today other lenders are offering at 3.12% for 15 years and needed your help in deciding whether to go with the same high rate. my previous lender is unwilling to provide a lower rate. Please advise on whether to cancel the terms or not? Also if i wasn’t told of any cancellation penalties is it normal for lenders to charge cancellation fees for rate lock?

  33. Colin Robertson October 22, 2014 at 9:34 am -

    This is why verbal commitments aren’t really commitments after all…some banks charge rate lock cancellation fees, while others simply charge upfront for appraisal and credit report and those items might not be recouped if you go elsewhere. You can try to negotiate but if they won’t budge and rates are significantly cheaper elsewhere, it’d be tough to make a case for staying with your current lender, especially if you feel they already misled you.

  34. Jamieh. October 28, 2014 at 4:39 pm -

    Okay, Mr. Robertson. My mother was with the company “Green Point” in 2001, then in 2007 the company went bankrupt. The company “Greentree” is the current provider. They are not honoring the original contract, and refuse to send the original contract after it being requested on many of occasion. Should they still honor the contract, or are they allowed to change the rate? The original contract was set up for when she retired from the post office in 2013…but in 2013 when it was supposed to be paid off she was informed that she still had 7 years left. What if at all can she do? (sorry if this is worded badly, I am 18 and kind of don’t fully understand all of this lol)

    Thank you,
    Jamie

  35. Colin Robertson October 29, 2014 at 8:52 am -

    Jamieh,

    What did the contract say? What was her interest rate and what is it now? What is/was it supposed to be? I need some more details.

  36. Larry November 23, 2014 at 10:30 am -

    Hello,
    I received a GFE when I applied for a loan (4.875 with no discount points) and 22 days later asked to lock the rate at our newly negotiated 4.625% rate. I received email confirmation that they had me in at 4.625 now and did not mention anything about it being a buy down or discounted rate. No costs to lower the rate were ever relayed to me. The loan officer referred to it being locked in subsequently.
    The original GFE does not specify any rate locks so if the only reference to locked rate is the 4.625 why would they charge me discount points for the lower rate at closing?
    They knew I was on a time crunch for other reasons and had to sign for the refinance that day.
    thanks

  37. Colin Robertson November 24, 2014 at 1:44 pm -

    Larry,

    I don’t know how your negotiation process went but they should have disclosed any cost to you for the given rate offered.

  38. Larry November 24, 2014 at 3:21 pm -

    Thanks Colin,

    I advised via email that I was going with a different lender and the response from my LO came back “we have you in at 4.625%, I can lock it today”. No mention of costs or fees to purchase this rate was offered until night before signing in an emailed GFE.

    The original GFE said “I” had to lock my interest rate in which I believe I did via email and it was confirmed via email. We did not have a rate lock document as I was on a tight deadline anyway but how could they charge discount fees if first notice of costs to buy down was night before signing?

    I had to sign and they knew it because I was refinancing a short settlement which would result in a principal forgiveness with former lender but the deadline was already extended and could not be extended again.

    Thanks so much
    Jim

  39. Colin Robertson November 24, 2014 at 4:59 pm -

    Not sure why they offered you a lower rate at a cost to you. Perhaps to reel you in if you were thinking of going elsewhere? Were you happy with 4.875%? It sounds like they disclosed the new rate/fees and you went with it, even if reluctantly, though it doesn’t sound like the LO was very upfront about it.

  40. Caspase December 15, 2014 at 12:18 am -

    Hi,
    We agreed to a an 7/1 ARM loan with our lender. The loan got approved, and in 2 weeks the Escrow will close. Is it possible to changed the 7/1 ARM to 30 yr fixed with the same lender?
    Thanks

  41. Colin Robertson December 15, 2014 at 11:54 am -

    Caspase,

    Just let your lender know ASAP…if you already locked, they’ll likely need to use 30-year fixed pricing from the day you locked.

  42. norma December 23, 2014 at 10:47 am -

    Hi! Should I do a rate lock of 4.125% for 60 days or let it float until we are closer to closing in January or February?

  43. Colin Robertson December 23, 2014 at 12:50 pm -

    Norma,

    That’s a personal decision. It depends on today’s pricing versus what you believe pricing will be like in the near future. Nobody can say with certainty what the right move is. Someone who thinks rates will be lower when it comes time to close might choose to float. The opposite is also true. Generally it’s something you’ll discuss with your loan officer or broker.

  44. Caroline January 20, 2015 at 5:25 pm -

    Hi,

    Our closing is delayed 2+ weeks due to a burst pipe at the house. Our lock is expiring but rates are now lower. Do we HAVE to pay to extend our lock at a higher interest rate or can we let the lock expire and float it until closing? Thanks!

  45. Colin Robertson January 20, 2015 at 6:02 pm -

    Caroline,

    Some lenders charge a relock fee and/or offer worse-case pricing if your lock expires and you relock within 30 days of expiration. So it can be tricky to “win” here, but you may want to see what your lender’s specific rate lock policy is and determine if they can help you out given the recent rate drop. Also note that rates can also rise, so there’s no absolute guarantee they stay low over the next couple days, weeks, etc.

  46. Ellie January 27, 2015 at 12:43 pm -

    My rate lock is about to expire. Since rates have gone down, why would I not just let it expire and start over? Why pay a rate extension fee?

  47. Colin Robertson January 27, 2015 at 1:20 pm -

    Ellie,

    Read my previous comments. It’s not so simple unless you apply with a different lender and start the process over again.

  48. Forest January 30, 2015 at 1:07 pm -

    Hello,
    We just locked a rate for a refinance last week. It is 3.75% for 20 years. Our mortgage person in charge told us that the penalty is just over $1,000 to unlock and use a new rate. Our rate lock will expire in the middle of March.

    Could you give us your advice. What rate should we unlock and use a new rate?

    Thank you for great information on your website.

  49. Colin Robertson January 30, 2015 at 4:04 pm -

    Forest,

    Not sure what the unlocking penalty is…usually if you switch loan programs after locking the lender uses worse-case pricing from the original day you locked and the day you change the lock. So if rates went down since you locked, you’d just get the original day’s pricing. But if rates increased, you’d have to take the higher rate if you wanted to switch programs. That’s generally how it works.

  50. Forest January 30, 2015 at 4:58 pm -

    Thank you Colin. I might not use accurate word “penalty.” The person in charge said that we need about $1,000 to use a new rate in the locking period. I might make mistake what she said.

    Generally, how much percent of a rate goes down during locking period, we should use a new rate, even though we pay $1000? Or let me know if you know good calculation website for refinance.

    Thanks a lot!

  51. Dave February 2, 2015 at 1:45 pm -

    I recently had my home appraised for 470k, I then applied for a re-finance, but their appraisal came back at 425k. This raised the loan to value ratio to above 70%.

    So now they want $3,000+ cash to close, rather than zero.

    Does this change the game regarding breaking the rate lock? Or will I still need to pay the loan origination & attorney fees? I realize I would be out the fee for the required appraisal, as I all ready paid it out of pocket.

    Thank you!

  52. Colin Robertson February 3, 2015 at 11:10 am -

    Hey Dave,

    It might be that if you want the original interest rate you locked, you’ll have to pay points now to obtain it at the higher LTV because pricing worsens as the LTV rises. Alternatively, you might be able to take a slightly higher interest rate and still get the original $0 cost or close to it. Those other fees are paid if and when the loan closes.

  53. Colin Robertson February 3, 2015 at 1:00 pm -

    Forest,

    It sounds like you would have to determine how long the lower interest rate would need to be paid monthly to recoup any related costs.

  54. armen February 17, 2015 at 8:29 pm -

    Hi Colin,

    My rate (3.87) expired last feb 5 and and was re-locked by the bank up to feb 23 for free (out of good faith). I was disappointed to find out that I will close on march 3rd which means that I need to re-lock again. This time my loan officer is telling me that I need to pay a full extension fee. What are my options? I don’t want to pay extension fees as much as possible. Can I pay .125 for seven days instead of the .25 days for 15 days. Thanks

  55. Colin Robertson February 18, 2015 at 12:48 am -

    Armen,

    You can try to negotiate a smaller extension fee but it might be tough if they already gave you a freebie.

  56. Victoria March 3, 2015 at 1:43 pm -

    Hi Colin,
    If I lock in my rate for 60 days from lender A, and let’s say 15 days before the closing the rate drops and lender B can give me a lower rate. Would lender A penalize me for not using them and going with lender B? Thank you!

  57. Colin Robertson March 3, 2015 at 3:12 pm -

    Victoria,

    It depends what their lock agreement says and what you’ve already paid, if it’s non-refundable, and so on.

  58. Anna March 9, 2015 at 9:06 am -

    Hi Colin,
    Using PHFA loans and the interest rate was initially 3.75% when I signed, however I had to wait 3 days for the seller to sign the agreement and now the interest rate is 3.875%! My agreement says not to exceed 3.875% , should I lock the rate since my finance advisor said the interest today is 3.875%??

  59. Colin Robertson March 9, 2015 at 9:10 am -

    Anna,

    That’s up to you. Rates can fluctuate and change daily (as you’ve seen) and it sounds like you aren’t allowed to let the rate drift any higher…they can also drop too but then it becomes a speculation game.

  60. Christina March 18, 2015 at 8:28 pm -

    Hi Colin,
    Since early February I’ve been in the process of refinancing my home, which I have 100k in equity on. I was told by my mortgage broker that I should go from an FHA to a conventional loan and accept a higher interest rate (4%) as it would mean less in closing costs. I agreed and was sold on the numbers they presented me with as they said I was locked in at that rate. I had the appraisal done March 3rd and have not been charged for it yet. After I contacted the broker to get an update, she finally communicated to me that the lender didn’t turn in my loan documents “on time” and now I’m being asked to take a 4.1% rate and to roll in an additional $500 to my loan. I am displeased with the service I have received so far and that I am not getting the deal I wanted because of the brokers/lenders fault.

    My question is, am I still responsible for paying the appraisal? I signed an appraisal fee authorization with my credit card information more than a month ago. My GFE stated that it was good through 2/26/15 and it doesn’t appear that the interest rate was ever locked. It’s been a slow process, they’ve done a poor job of communicating with me and now they are offering me a deal that I didn’t sign up for. I feel I can get a better deal elsewhere and/or just do an FHA streamline with my current lender. Advice?

  61. Colin Robertson March 18, 2015 at 11:56 pm -

    Christina,

    Generally, if a lender screws up you shouldn’t be paying more, they should work with you to make it right. And there’s a chance rates may drop a bit in the near term, so that could also help you get the deal you want. I don’t know about switching loan types/programs entirely because of a delay and slight change in pricing. If you’re that wishy washy you may want to rerun the numbers.

  62. Sam March 20, 2015 at 1:47 pm -

    My lender who is also my builder is offering a 6month rate lock. For my house which will ready in September, he is offering a 30yrs rate lock of 3.25%. When i put forth the same before another lender/bank, he started laughing this off saying no lender will stand by their word so far ahead. With the recent news that the interest rates might increase in June, is it advisable to lock the rate so far ahead. Please advice.

  63. Colin Robertson March 20, 2015 at 6:07 pm -

    Is it a 30-year fixed? Or just a 30-year loan? There’s a difference…it does sound very low. When it comes to locking, it’s always your decision. You can’t ask someone to predict the future for you, and that’s basically how rates work. It’s an unknown whether they’ll go up or down. People generally lock if they feel they’ve got a good deal today and won’t see anything better in the future.

  64. Vincent March 30, 2015 at 11:18 am -

    Hi Colin,

    I applied for a mortgage and did not have benefit by the loan officer of discussing a rate lock or float option. I was not aware there was such a thing as a float option until FeEx delivered the loan packet (3- disclosure) and I read the Floating or Price Protection page. I absolutely would want a floating rate in this rate environment. I immediately called my lender who insists I am stuck with the locked rate. Please advise if she is correct.

  65. Colin Robertson March 30, 2015 at 1:19 pm -

    Vincent,

    It’s generally good business practice to discuss floating with borrowers before actually locking. Did you ask why they went ahead and locked without running it by you first? If they aren’t being forthright perhaps consider shopping around elsewhere.

  66. Mike April 4, 2015 at 2:01 pm -

    We applied for a refi (with same lender of our current mortgage). We have locked the rate. Their terms state we are responsible for the 3rd party fees (about $450) if the loan does not close. If rates were to drop between now and closing, is there any problem that is not apparent with simply not closing with the lender, losing the 3rd party fees per the agreement, and going with another lender at a lower rate if it’s an overall better deal for us? Basically, I’m asking if there’s possibly some additional catch you see that we’re not seeing.

  67. Colin Robertson April 4, 2015 at 9:26 pm -

    Mike,

    I can’t see what you see, but generally lenders charge that application fee/appraisal fee of several hundred bucks to cover their costs in the event the loan doesn’t close. And borrowers do tend to shop around in the event there’s a better deal.

  68. Cody April 21, 2015 at 10:30 pm -

    Hi Colin,

    I verbally agreed to have my rate locked at 3.75 but did not sign any papers nor did we discuss the length period. Can I argue that since I didn’t sign any documents, the rate locked is not valid?

  69. Colin Robertson April 22, 2015 at 8:31 am -

    Cody,

    If you verbally agreed and rates went up, you’d probably ask your lender to stand by your lock.

  70. kona April 29, 2015 at 2:54 pm -

    Hi Colin – I locked in a rate at 3.75 but that was because the lender agreed to pay mortgage insurance for me (I put down 10% when I purchased the home about 1.5years ago). Without the lender-paid MGI my rate would have been 3.50 at the time we locked it in. The whole scenario was built on the premise that my house would be at the very least be appraised at the amount paid for it. It turns out my house was appraised for about 20k more than I paid for it. Assuming I am willing to pay the remainder that will get me to 20% equity, can I technically request that the extra 0.25% put on for mortgage insurance be removed? Or once locked I can’t do anything about the rate?

  71. Colin Robertson April 29, 2015 at 4:39 pm -

    Kona,

    If you no longer require LPMI and it was built into your rate, they will probably adjust the rate down based on what it would have been without it on the day it was originally locked.

  72. Jai April 30, 2015 at 3:44 pm -

    Hi Colin – I locked in at 3.875% with $890 rebate for a cash-out refi almost 3 weeks ago. The appraisal is done and the loan was to close in a little over a week. Today the lender informs me they no longer offer cash-out refi in my state. Now to get the same deal with another lender it will cost me $2,500 more and extend the closing time. Can I hold this lender responsible for this additional cost to get the loan from another lender due to their negligence? Is there any legal ramification for them? Thanks, Jai

  73. Colin Robertson May 4, 2015 at 9:46 am -

    Hi Jai,

    Not sure you can hold them accountable if it turns out they can’t do your loan. It’s certainly unfortunate. Maybe you can plead (to management) for them to close your loan since you were already locked and submitted before their apparent change in policy?

  74. Trevor May 5, 2015 at 4:12 pm -

    We are in the process of refinancing. We locked in at 3.79% for 90 days. i have a written agreement and gave the bank my credit card to secure it with $500. Since then, the bank sent their own appraiser (which they own—I had to sign the disclosure stating such) and the appraisal came in $30,00 under what I estimated the home to be worth on my application. Now they are saying the interest rate will increase to 4.3% because the Loan To Value (LTV) is too high. Can they do that? I do see that in my rate lock agreement there is a paragraph that says “If any information in the ‘Details of your property’ section changes, your interest rate may be subject to change.” This feels like a classic bait & switch to me and a half point increase is significant. At the very least, I should be able to rescind the lock-in agreement and not lose my $500! What are my options here? Thank you.

  75. Colin Robertson May 5, 2015 at 6:49 pm -

    Trevor,

    Like you pointed out yourself, the lock is subject to change if the loan changes, which it did because the value came in low and thus the LTV went up. You can ask for a second appraisal, proceed with that new LTV, or shop elsewhere but watch out for the upfront appraisal fees.

  76. Jai May 6, 2015 at 11:52 am -

    Hi Colin,

    Thanks for getting back. We tried that approach, but then come to find out apparently they never offered cash out loan in TX. The loan officer screwed up. They have offered to do a regular refi at 3.75% at no cost. Since this is better than what we would get elsewhere now, we have decided to accept their offer. But I wish there was some legal way of holding this loan officer accountable. Now we have to come up with another source of funds for remodeling. Thank you!

  77. Nadia May 10, 2015 at 10:45 am -

    Hi Colin,

    My newly built house is due to be completed at the end of this month. I have yet to lock-in a rate. the lender #1 works directly with my builder but their rates are not competitive. I have talked to my loan officer with lender #1 and he willing to match Lenders#2 who is more competitive. The only thing I need to do is provide him with an official cost estimate from lender #2. So as I’m waiting for rate to drop I have been notified by my loan processor of lender #1 that my loan has been almost processed. My question is the following, If my loan gets processed and the lender #1 won’t give me a competitive rate, can I still switch the lender or am I stuck with whatever lender #1 offers? Thank you in advance.

  78. Colin Robertson May 11, 2015 at 10:33 am -

    Nadia,

    Generally you can always switch lenders before actually signing the closing loan documents, but beware of any upfront costs that may not be refundable if you don’t use that specific lender.

  79. Alexis May 21, 2015 at 2:08 pm -

    Hi Colin,
    We’re in WA state, and finally after 8 offers and swapping to another lender our offer was accepted on a house. However, three days before we put the offer on the house I checked with the lender to make sure if was within our affordable terms, and we had enough money for down payment and closing. He gives me a quote over the phone, and everything was ok. We signed the sales and purchase agreement on the Friday and on Monday he tells me that my mortgage payment is $75 more per month than he originally quoted and our closing out of pocket costs have doubled!! When both my husband and I questioned him about his previous quote, he says the market changes (yes we all know that we’re not idiots) and then denies ever giving me the other quote over the phone! We are now literally sick to our stomachs as we don’t have the extra money for closing. Our lender says the bank will come after our IRA’s to take the money out. Or my kids college fund if we don’t have the money in our accounts. We also put $5000 Ernest money down as we were told $2000 wasn’t enough to be taken seriously in the Seattle area market. We are awaiting for the appraisal to come back, and hopefully it will come in low or there will be something in the title. When I asked our lender why we couldn’t do a pre-lock? He replied that their bank doesn’t do that, and no one does in the country!! I really feel like we’ve been taken for a ride, and may possibly loose our Ernest money if we have to pull out because of terrible misrepresentation by this lender!!
    Thanks for any help you can give to us.

  80. Colin Robertson May 21, 2015 at 3:48 pm -

    Alexis,

    Maybe you can take a slightly higher interest rate in exchange for a lender credit to cover those closing costs (so they aren’t paid out of pocket). And possibly shop around at different banks is this guy isn’t being forthright.

  81. Valarie May 22, 2015 at 7:15 am -

    I locked in a 30year fixed at 3.875% with 0 points. The lock expires 15 June. I’ve just received paper work that said I’m locked in for 30yrs at 3.875% with $1942.50 in points. The loan is a refinance. Original purchase price was $235,000, current appraised value is $139,000. I owe $122,000 and have agreed to the total loan to be 80% of the appraised value. The property is a condo. My current rate is 5.25%. My plan was to pay it off or reduce the payment low enough to take into retirement. Retirement is 2 years 3 months from now. Is this legal? Is the good faith? Can I force them to honor our original agreement?

  82. Colin Robertson May 23, 2015 at 8:05 am -

    Valarie,

    There should be an explanation as to why the cost of the loan changed, and perhaps a re-disclosed GFE. Ask why it is now a cost.

  83. Beth June 9, 2015 at 7:46 am -

    Hi Colin, We began the refi process with a local CU on 4/17. It is now 6/9 and they have finally gotten through appraisal/underwriting etc. We were *never* offered or talked to about a rate lock. The rate they are now quoting us is 4.875% – which is much higher than the original 4.375% they quoted us on the GFE. We would certainly have locked the rate earlier, but we were never given that option. Do we have any grounds to negotiate with them to lower the rate? I know legally they don’t have to do anything, but do you think they’ll budge? (For the record, communication has been terrible. The LO doesn’t answer her phone, ever, and takes 48 hours or more to return emails.)

  84. Colin Robertson June 9, 2015 at 11:22 am -

    Beth,

    Are you sure you didn’t sign a disclosure about floating your rate early on. You can always try to negotiate a lower rate and/or lower fees, but decide why they should negotiate with you before you make that call. And there’s always hope rates dip again before it’s time to close, though the opposite can also happen.

  85. Mike D June 11, 2015 at 6:30 pm -

    I have an interesting scenario..my wife and I checked out a house and put an offer in. the offer was accepted but never went to attorney review because the woman could not guarantee she could be out (probably shouldn’t of been selling). Anyway, our lender said we could lock in at 3.75 for 90 days or 3.83 for 120 days..I chose to lock in at 3.83 and received an email confirmation…the house shortly fell through and within 4 days we had another offer in, accepted, and through attorney review- now the lender is saying the best they can do is 4%…the thing is the 120 days haven’t expired- my question is the rate for me or the property? Please help thank you.

  86. Colin Robertson June 12, 2015 at 4:46 pm -

    Mike D,

    Locks are generally tied to a given property, not YOU as a borrower. The lock agreement may even specify that. Some banks may allow you to transfer the lock to the new property but it also probably depends on the rate environment, which as you probably know has not been favorable. 4% is not far off from 3.83%…you could haggle for some closing costs maybe?

  87. Ann H June 28, 2015 at 9:19 am -

    Hi Colin,

    I wanted to refinance with my original bank. Three months ago, when I inquired about it, my loan officer sent me a disclosure with a rate of about 4.2. I wanted to lock but they didn’t do it. Now I’ve gotten a second disclosure with an additional 5000 in fees and a rate of 4.6. My FICO is good (not excellent, but good) and has gotten better in the past three months. I have made every payment on time since the loan orgination. Is this ethical? And is this rate as horrible as it seems to me? I’m considering backing out of the loan altogether.

  88. Colin Robertson June 29, 2015 at 8:35 am -

    Ann,

    You “wanted” to lock? You either lock or you don’t and you get confirmation right after. It doesn’t sound like it was clear that you 100% wanted to lock X rate. In any case rates have risen, which explains your new higher rate that went unlocked. You could shop elsewhere or reconsider the refinance if you’re no longer happy with the rate.

  89. Sam July 2, 2015 at 10:14 am -

    Hi Colin,
    I had my lender extend my rate lock 4 times due to their fault and delays in processing. I would like to know what it actually costs the lender to extend this rate lock to me each time. I believe that there is no cost involved as they are the lenders and they can choose whatever interest they would like to provide me for the loan. Please clarify.

    Thanks!

  90. Colin Robertson July 2, 2015 at 10:37 am -

    Sam,

    Everything has a cost…especially in a rising rate environment. And the longer the rate lock period, the higher the price because they’re guaranteeing something (a price that can fluctuate) further into the unknown future. But banks hedge their interest rate risk so technically they might be just fine. Still, it’s a concession on their behalf to extend your lock for free but completely fair if it’s their fault.

  91. Ivan July 22, 2015 at 8:15 am -

    Hi,
    So my interest rate lock expires the same day as I’m set to have my closing. Will i be able to keep my rate?

  92. Colin Robertson July 22, 2015 at 11:04 pm -

    Ivan,

    Ask your lender…they should be able to extend a day or two if necessary. I’m sure they’re also well aware of the expiration date.

  93. Brendon August 3, 2015 at 7:04 pm -

    Hi Colin,

    I locked in a 6 month rate lock with a lender (new construction) but the lender never actually took any money from me, rather they mentioned the cost in the GFE (1% of loan) as a settlement cost. I am now within 60 days of closing and rates are a little lower than before. I found another lender who is offering a rate which is 0.5% less and no points for the 60 day lock. So I would be saving $5K in upfront costs (1% of loan) and $150 in monthly mortgage if I went with this second lender. If I change lenders, would I owe the lock in fees to the first lender? Can they come after me for the lock in fee they never took from me? They havent really done any title search, appraisal, etc as we are still 60 days from closing.

    Both these lenders are the “big banks”, not a regional or mom-pop shop. Any rules that govern this stuff?

  94. Colin Robertson August 3, 2015 at 11:27 pm -

    Brendon,

    So-called lock jumping is perhaps more a question of ethics, and sometimes a matter of upfront fees that may have been paid. But if rates improve significantly it’s not unexpected for borrowers to shop around or attempt to negotiate with their existing lender. It probably works both ways – sometimes lenders are on the losing end, sometimes on the winning end if business jumps their way. Be sure to consider the new bank’s closing track record when thinking of switching lenders. And remember rates can move quickly.

  95. Christina August 12, 2015 at 7:45 am -

    We are building a house and using the builder’s preferred lender as they pay closing costs. We locked in a 60-day rate and have been told that, as a small bank, there is “nothing” that they can do to take advantage of lower rates. While I understand if rates went up, then I would be thrilled I was locked; but I am furious that I cannot go down.

    Is there anything that I can do, or any leverage that I have to take advantage of lower rates, without letting the lock expire?

  96. DB August 22, 2015 at 4:11 am -

    My lender locked me in at 3.85%. One of the agreements of the offer was that I would get a second pre-approval by the sellers’ lender. It came back at 3.75%. They seem more than willing to bend over backwards for my business.

    Im not really happy with the way my lender is handling things (Quicken Loans).

    Can I use the fact I’m pre-approved with this other local lender as leverage to get a lower rate with my current lender? I’m sort of sorry I didn’t shop around locally first.

  97. Colin Robertson August 22, 2015 at 9:27 am -

    DB,

    You can always try to negotiate…and it certainly helps to have another lower offer to state your case. Good luck.

  98. jojobee August 31, 2015 at 12:01 am -

    I’m under contract to buy a house. I’ve been “pre approved” and signed all the loan documents, but now that the inspections have shown me all the problems, I’m thinking of backing out. What are my obligations to the lender if I do that?

  99. Colin Robertson August 31, 2015 at 10:06 am -

    Jojobee,

    It depends if you paid for anything upfront. Check your paperwork.

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