When you are buying or refinancing your home, the interest rate you receive is a key factor in your overall costs. By locking in your rate early, you can avoid the worry of potential increases in the months leading up to closing. An extended rate lock will give you the peace of mind of knowing what your interest rate will be, no matter what happens in the market.
How Do Mortgage Rate Locks Work?
Mortgage rate locks are a valuable tool for homeowners looking to protect themselves against rising interest rates. By locking in a mortgage rate, you ensure that the interest rate on your loan will not increase during the locked-in period. This can provide peace of mind and some added security as you make your way through the home buying process.
Your loan officer will generate a mortgage estimate when you apply for one. And to ensure that interest rate is included at closing, it’s important to lock in rates early!
What is an Extended Rate Lock?
An extended rate lock, sometimes called a “rate hold,” is a mortgage term that extends the time you have to close on your home loan past the original date. It can be useful if interest rates rise between when you apply and when your loan closes. But there are some things to know before you decide if an extended rate lock is right for you.
However, if rates fall during the Extended Lock period, the borrower is still locked in at the higher rate. Extended rate locks can be a good option for borrowers who are close to locking in a loan and want to protect themselves from potential rate increases. For example, if you are 60 days away from closing on your loan and rates have been rising steadily, an extended lock may give you the protection you need to avoid paying a higher rate
Who Can Benefit from an Extended Rate Lock?
Extended rate locks are available for a fee from most lenders and can be very helpful for borrowers who are not quite ready to close on their home loan. An extended rate lock protects borrowers from increases in interest rates for an extended period of time, typically 30-60 days.
This can be very beneficial for borrowers who need a little more time to finalize their purchase or who are waiting on a mortgage approval. Extended rate locks are also available for refinance loans, and can provide borrowers with peace of mind during the refinance process.
Want to Learn More?
Are you dreaming of a new home, but have been waiting for the perfect time? We can help! Our experienced mortgage officers are here to help make the home-buying process as smooth and stress-free as possible for you!