Mortgage rates fluctuate. The most recent movement sees a dip in interest rates on 30-year mortgages, the most common type of loan, at its lowest since the previous year. The best way to make sure you get the same interest rate that the bank quoted is to secure a mortgage rate lock.
A rate lock, according to migonline.com, gives you mortgage at the agreed-upon rate during the lock-in period. The lender adds that even when rates rise before closing, you will still get the lower interest rate.
Rate locks can last anywhere between seven days to 90 days. You can choose how long your rate lock will be. You can take into account any delays that may occur along the way. Sometimes, delays can even push your mortgage closing date beyond the rate lock period. In such times, you can ask for a rate lock extension that can cost you a fee of several hundred dollars.
Accomplish All Paperwork
You can make sure that you close your mortgage before any lock extension occurs, saving you from the hefty fee. You can fill out your mortgage applications quickly and submit them promptly. You can also submit any other documents your lender asks for immediately. You can have an easier time closing your mortgage when you finish all the necessary paperwork.
Follow Up on Your Mortgage
In addition to finished paperwork, you can also check your loan progress with your lender regularly. When you actively handle your mortgage, you can easily respond to any needed tasks. You can also easily check any incorrect information on your mortgage, sale contract, or closing date.
Negotiate with Your Lender
When delays happen, however, because of the seller, you can negotiate with your lender about a rate lock extension without paying any fees. You then have to ensure that your sale contract will include a clause indicating the seller’s responsibility for paying your lock extension fee. In other cases of delays beyond your control, you can also negotiate with your lender.
A mortgage lock can help you manage payments and stay safe from rising rates. But the rate lock also keeps you from taking advantage of low rates when they fall. There’s also the rate lock extension fee to think about. Considering the advantages and drawbacks of this feature, you’ll want to seek professional advice before committing to a loan agreement. This way, you don’t worry about rushing to close your mortgage to avoid paying an extension fee.