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Lock Periods

Posted on January 24 By MLP Lending Guide

The lock period is the period during which the lender guarantees the rate and points associated with the mortgage. If the lock period is 30 days, at 3 points and 5.5%, the lender is required to make the loan at that price any time within the 30 days. After that, the lock period may be extended for a small fee if rates haven't raised, or if they have, the new lock period will include a new, higher rate. If you have some difficulty qualifying at today's rates, you will want to lock in a mortgage as soon as possible, to avoid further potential rate and/or point increases. Additionally, you'll want to select a period long enough to cover the closing date of the loan, as well as a buffer period of 2 weeks. This way, in case there are any unforeseen problems, you will still have the rate and point combination that you locked in. There is also the possibility of taking a risk and waiting to lock in. If rates haven't risen for 15 days during a 30 day lock period, the number of points you have to pay may drop a little in order to encourage people to obtain the mortgage.

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2 Responses to "Lock Periods"
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  2. Lee Van 25, Jan, 2007

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