Lock durations can vary for mortgage financing, but most lenders lock in the interest rate for 60 days from the date the loan application is submitted. As long as the loan is closed within that lock-in period, the lender honors the agreed upon interest rate.
Some consumers are misled by advertising that quotes unrealistically low rates based on 15- or 30-day lock durations. This is called 'short-pricing.' The lender basically knows the borrower doesn't have time to meet their conditions and have all the necessary paperwork in order within that brief time period. As a result, the lender is not obligated to honor the low rate that was listed in their advertising.
For simple refinance transactions, a 45-day lock-in period is more realistic. For purchase transactions, which are typically much more complex, you're much safer going with a 60-day lock, even though the interest rate might be a little higher than the rate you see quoted on billboards and the Internet.
Borrowers should make sure they have a written rate lock agreement, and allow themselves a reasonable amount of time to close their loan. I prefer to lock in all my clients as soon as their application is filed, rather than gamble with predicting short-term interest rate movement. My team and I focus more on assisting clients with long-term goals and management of their mortgage debt to secure a strong financial future.
Mortgage Interest Rates*
Rates as of 06/25/2007:
Conforming
APR
Payment per $1,000
Jumbo
APR
Payment per $1,000
30 Year Fixed
6.5%
6.621%
$6.32
6.625%
6.812%
$6.40
15 Year Fixed
6.25%
6.359%
$6.16
6.25%
6.459%
$6.16
5 Year ARM
6.375%
6.568%
$6.24
6.5%
6.713%
$6.32
5 Year Interest Only ARM
6.375%
6.568%
$6.24
6.5%
6.713%
$6.32
30 Year Interest Only
6.75%
6.903%
$6.49
6.875%
7.001%
$6.57
*Rates are subject to change due to market fluctuations and borrower's eligibility.
Thanks Ramsey. 60 day lock, really? Maybe in GA it's done a little differently, but in Hawaii a 30 day lock is usually enough time to close it. Unless it's VA then we'll do a 45 day. I've never heard of 60 day here, interesting. Good for those long closings!
Ramsey, thanks for this information. I had no idea and it never crossed my mind that a low rate is being advertised with the lender knowing full well that the buyer does not have time to meet the conditions. Oh, how I wish the powers that be would put an end for these type of misleading tactics. I applaud you for bringing it to our attention.
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Lock durations can vary for mortgage financing, but most lenders lock in the interest rate for 60 days from the date the loan application is submitted. As long as the loan is closed within that lock-in period, the lender honors the agreed upon interest rate.
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