How to Lock Your Home Loan Rate

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How do you lock in the best Arizona home loan rate?  In a stable market this is not a huge concern.  However, in a volatile market borrowers are eager to lock in the best Arizona mortgage rate as soon as possible.

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When to Lock Your Mortgage Rate

There are a few basic rules to follow when you lock in a mortgage rate.

RULE 1:  Have a property address

On a refinance this is easy.  The specific address is the property that is being refinanced.   When it comes to locking an interest rate on a purchase loan RULE 1 changes the process.  On a purchase, RULE 1 means a borrower must have a property under contract in order to lock an interest rate.

RULE 2: Know your closing date

Interest rates can be locked for different periods of time.   In addition, your mortgage rate must be locked through the date your loan funds.  The standard mortgage rate lock periods is 30 days.  In other words, once your rate is locked in, your rate is “good” for a 30 day period.  Assuming your your loan closes on or before your lock expiration date than your rate is what you locked in at.

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What Happens When a Rate Lock Expires?

When you get to the end of your lock term, there are different options.  Choosing the correct option depends on several factors.  There can be costs associated in a situation where a rate lock expires.  Your options at this point are:

  1. You can let your mortgage rate lock expire you could then re-lock
  2. You can pay to extend your lock

Many Arizona mortgage companies offer extended mortgage rate lock terms.  It is common to see 45 day, 60 day and 90 day lock terms.  Extended lock terms cost a borrower in terms of either fees or rate.

How to officially lock your mortgage rate

Many Phoenix area mortgage lenders do not require any specific action from the borrower to lock in a mortgage rate.  Other Arizona mortgage companies require a borrower sign a rate lock form before they will lock in an interest rate.  It is important to understand what your lender’s locking policy is.

It is important you work with your lender to discuss mortgage rate locking options.

By Jeremy House

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