What does "Locking In" a Loan Mean? 

1.)    What happens when I sign an agreement to "Lock In" my loan?

When you "Lock In" a loan, you are "Locking In" the interest rate and points  available on that day for the time period specified by the Lender.  If your loan is approved by the Lender and you close in that specified time frame, you will receive the rate and points according to your Lock In Agreement, regardless if rates increase or decrease during the 60 day  "Lock in Period".  A "Lock In Agreement" from the Lender is like having an insurance policy to protect you from increasing rates during the "Lock In" period.  When you sign the "Lock In Agreement," you are stating that you are satisfied with the rates and points available on the day you made the decision to "Lock In."

This rate has been locked in assuming all terms disclosed at the time of your application are true and correct.  The actual interest rate, discount points, and annual percentage rate offered may differ from the posted rates depending on your credit qualifications such as occupancy, credit score, loan to value, type of of property, and transaction type such as purchase, refinance or refinance with cash back to you at closing.  If any terms change during the process of this loan including appraised value, the Lock In Agreement may become null and void.  If this Lock In Agreement becomes null and void, you will be eligible to renegotiate your rate based on the rates quoted on the effective date you originally Locked In.

2.)    What happens if I choose not to "Lock In" my Rate and Points?

If you elect not to "Lock In" your rate and points, then your interest rate and points will "Float" with the market during the time the loan is being processed.  If you choose to "Float", you understand that you are assuming the risk of the interest rate market with no protection from the Lender.  You may take advantage of interest rate decreases during the time your loan is in process, but you are also bearing the risk that interest rates may increase during the loan process.  If interest rates rise, you understand that you will have to close your loan at a rate higher than the rate quoted to you at the time of application.  If you are not within sixty days of your closing date on a purchase, it is required that you float your rate.

 

3.)    What obligations does the Lender have to me when they "Lock In" my loan?

Your Lender is assuming the interest rate risk for the time your loan has been locked in.  They are agreeing to hold your rate and points for the length of time agreed upon in the "Lock In Agreement,"  even if market rates increase, causing the Lender to suffer a financial loss.  Given the volatility of today's interest rate environment, the "Lock In Agreement" allows you to avoid the interest rate risk.

4.)    What obligations do I have to the Lender when I sign the "Lock In Agreement"?

Like all agreements, the "Lock In Agreement" creates a two-way obligation between the Borrower(s) and the Lender.  The Lender offers you full protection in an increasing rate environment, and in turn you are agreeing to abide by your obligation in a declining interest rate environment.  You are also agreeing that by simply withdrawing your loan and reapplying for a new mortgage is a breach of this agreement and a new "Lock In Agreement" will not be honored by the Lender.  Your original application request will be honored up to a period of 120 days from the date of application whether the Borrower(s) have locked in at the time of application or decided to "Float" their rate at the time of application.  If you withdraw this application and reapply for a new mortgage application, all Lock In Agreements will be valid from your first application request within a 120 day period.

You have now viewed the terms outlined to lock in your rate.  You may launch the "Lock In Agreement" at this time.  Please follow the steps of fully executing the agreement as outlined on the form.  If you do not return the fully executed Lock In Agreement, your interest rate will "Float" with the market during the process of your loan or until we receive your Lock In Agreement.