If you were to pose the question to a new homebuyer wannabe about what a mortgage rate lock was or involved, you would probably get a blank face of bewilderment. On the other hand, those homeowners who have been “around-the-block” several times would know exactly what the term means. So the question before the house of common sense in simple terms is: “to lock or not to lock.” The good, the bad, and the ugly answers are forthcoming so fasten your seat belts; it’s going to be a bumpy ride.
Getting a home loan is not only loaded with paperwork and tedium, it can be full of surprises. So when you go shopping for a mortgage loan, you’ve been duly warned. The good news is that today’s interest rates are lower and more attractive than what your grandparents were able to get back in the 1940′s. The ugly news is locating a Louisiana mortgage lender who will treat you with respect, answer questions, and not try to impose his or her suggestions on what is best for you in terms of how a rate lock works; if they mention it at all. This is about the time you take-hold of the driving wheel and do a bit of research on mortgage companies in Louisiana. You’ll have plenty of choices; they’re like moss on a Mississippi tree stump.
Here are a few clues to remember about rate locks no matter what lender you deal with.
#1 – Understand the difference between a rate lock and a rate quote. A quote is merely a non-binding estimate. A rate lock, if in writing, is binding, and a promise you will get that particular rate for a certain period of time; but it won’t be free.
#2 – Make sure you know how long the rate will “freeze” and not be voided out
#3 – Get every promise, Scout’s Honor pledge, sworn on a stack of Bible’s, in writing and signed and dated by the owner or mortgage lender manager. The content of the lock should include your name, the terms, and loan amount.
#4 – Remember what these two terms mean: a rate lock means you’re in the pot with a rate you have chosen. A rate float means you will gamble that the rate may be lower five days before closing, and not lock.
#5 – Don’t listen to any lender suggestions you lock for only five days. Try and get a 30 day lock so at least most of the paperwork will be done with the lender and in escrow.
#6 – Read-up on the legalities of rate lock-ins. On occasion shenanigans may pop-up, and you’ll know how to spot them.