Mortgage Lock-in: Temporary Immunity From Fluctuating Mortgage Trends

By Author: Richelle Jelsma
Total Articles: 4
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If you look at a mortgage rate graph in news websites, they tend to resemble jagged mountain ranges. This means they often change by huge amounts—for example, your four percent mortgage rate today may be five percent tomorrow. It’s one mountain range that’s taxing to climb.

While you really can’t stop the graph from making jagged ranges, you can get it to impose a fixed rate for a limited period. This is called a lock-in, and it’s a useful tactic when your loan application is still ongoing. In a lock-in, the lender agrees to commit a lower interest rate despite the changes in the mortgage trends. Preferably, these commitments should be in writing, as simply promising it is hard to prove in case of anomalies.

There are many ways to impose a lock-in, but the Federal Reserve lists down three ways to do so. You can opt for a true lock-in where both the interest rate and points remain fixed, a partial lock-in where only the interest rate remains fixed, or floating interest rate and points. Lenders usually charge a fee for the lock-in service.

Some lock-ins can last for as short as a week or as long ...
... as four months; however, typical lock-ins last for one to two months. For the record, the duration should be long enough to settle matters and other things regarding the home loan. The quick approval of a mortgage loan, however, relies on the quick action of both the borrower and the lender.

During a lock-in, you may lose your chance of taking advantage of lower mortgage trends mainly if you chose the true lock-in. You can expedite the approval of your Salt Lake City mortgage by submitting the necessary documents to the lender as soon as possible. As there are dozens of paperwork to go through, it’s better if you start filing them right away. By being free of the lock-in at the soonest possible time, you can return to the normal mortgage trend.

The Federal Reserve advises the public to take into account several factors before applying for a lock-in. These include the length of the application process, mortgage trend, and the lender’s conditions in issuing a lock-in. When used effectively, lock-ins can make any mortgage Salt Lake City lenders offer a convenience.

For more information on lock-ins and options available, you can visit the Federal Reserve website at FederalReserve.gov. Also, BankRate.com has a Rate Trend Index that can predict whether or not rates of mortgage Salt Lake City UT has to offer will remain the same.