Extending The Lock On Your Rate Up to 360 Days!

by ritasimpson on November 1, 2013

in How's The Market

Jumbo-mortgage applicants are demanding long-term rate “locks” while they close on their homes. And rather than settle for the standard lock of a month or two, they’re asking lenders for commitments of as much as a year!

Rate locks provide protection and peace of mind in a rising-rate environment. Long-term locks are rarely free. Borrowers who want a rate lock beyond 60 days typically have to pay a deposit. Also, borrowers often aren’t locking the current market rate but rather that rate plus a fraction of a percentage point or more, and they don’t happen automatically. Applicants have to put in a request with the lender.

Even more interesting to know a rate lock alone may not suffice for many affluent borrowers. While rates have been rising, there have been brief pullbacks. As a result, some borrowers have turned to a so-called float-down option—which is essentially the best of both worlds: protection from rising rates and the ability to break the lock if mortgage rates decline by at least an eighth to a quarter of a percentage point. Borrowers typically have to pay a fee to have this option, which often equals around a quarter of a percentage point of the total dollar amount of the loan. For more check this.

 

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