If you are refinancing, you will have to choose the right time to lock in your mortgage rate, just as you did when you bought your home. Locking in the interest rate is the only way to guarantee the rate provided to you at closing. In fact, it’s required before you close on your refinance.
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Before you lock your rate, there are a few things you should do the following:
- Shop around to
find the best rate
- Ask lenders about their rate lock fees and procedures
- Ask lenders if they offer the option to float the rate down if rates drop
Locking in the Interest Rate
Once you are done shopping around and you have the lender you want to use, it’s time to lock in your rate.
You’ll need to
ask the lender for a rate lock-in form. If possible, ask to do this ahead of time so that you know what you need to lock in the rate. As you review the form, make sure you look closely at the rate lock fee. If the lender charges a fee, you’ll want to know that upfront.
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When it’s time to lock the rate, you’ll have to be in direct contact with your lender. It’s best to do it in writing. This way you have proof of the locked in rate. If the lender has a lock-in rate form, you complete that with the rate you want locked in and any fees/terms you agree to. If they don’t have a form, you can write up your own letter stating your request. The document or request must be signed and dated by all borrowers.
Once you send off your lock request, don’t assume the rate is locked. Ask the lender for written confirmation of the lock. This will also let you know how long the rate is locked. The typical rate lock is for 30 days, but
it can vary based on the lender or the loan’s circumstances.
The rate lock agreement should include:
- The agreed-upon rate
- The expiration date of the lock
- The address for the home the mortgage is for
- Any fees
- Any special conditions
Make sure you take your time and shop around for the right interest rate before locking. We know it’s easy to panic when rates go up, forcing you to lock quickly. Don’t give into the pressure. Instead, take your time, decide which rate is right for you and which lender will give it to you with the best terms.
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