mortgage rate lock<\/u><\/a> protects borrowers against rising interest rates during the lock period.\u00a0<\/b><\/p>Lenders sometimes offer a loan at a certain rate plus a few points.\u00a0<\/b><\/p>
The points represent the fees you pay at the start of the loan to get a lower interest rate for the life of the loan.<\/b><\/p>
If the interest rate drops during the lock-in period, the borrower can choose to withdraw the application.\u00a0<\/b><\/p>
This type of withdrawal is called the risk of loss for the lender. However, the borrower must be very careful to ensure that the mortgage loan lock agreement allows for cancellation.<\/b><\/p>
In some cases, when the interest rate drops during the lock-in period, the borrower may have the option of adjusting the new lower rate using the float-down facility.\u00a0<\/b><\/p>
This option may be an additional cost to the borrower as it has a potential risk for the lender.<\/b><\/p>
Mortgage rate locks usually may last for 15 to 60 days. At the very least, it should include a reasonable amount of time for the borrower to process their loan application. Sometimes this lock-in time can be as short as a few days.\u00a0<\/b><\/p>
A borrower can negotiate the terms of a rate lock and often extend the term of the lock for an additional charge or slightly higher interest rate.<\/b><\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t