mortgage simple definition: What is a rate lock?

What is a rate lock?

What is a rate lock?. Behind the Desk, E.3: What is a Rate Lock?

What is a rate lock? video duration 3 Minute(s) 41 Second(s), published by KenLends.com on 28 12 2018 - 18:10:04.

What is a rate lock? It is an arrangement between you (the borrower), and the lender
Both agree to lock the interest rate for a certain period of time (as little as 10 Looking for a new home? Lock in a LOW mortgage rate now while you shop! Give us a call to learn more! Home Mortgage Corp
5740 Getwell Road, Building .

This is how rate locks work! Follow us for mortgage news and info HERE: Instagram: https://www.instagram.com/rate1financ
Facebook: Oleg Tkach NMLS #: 90937 Branch Manager Guild Mortgage Company Cell Phone: (425) 4787676 Fax: (425) 9532918 olegt@guildmortgage.net This week on "Behind the Desk" we tune in for Jeff Batson to learn more about what a 'Rate Lock' is and how it can help you obtain a home loan.

What is a rate lock? It is an arrangement between you (the borrower), and the lender. Both agree to lock the interest rate for a certain period of time (as little as 10 days, as many as 180 days, 30 days is the most popular). Example: 30 year fixed rate conforming loan program with a rate of 4.5% locked for 30 days.

What if you lock a loan, then rates drop? You will not be able to break the lock getting a new lower rate. Remember you made an arrangement with the lender.

What if you lock a loan, then rates rise? The lender will not be able to break the lock getting a new higher rate. Remember the lender made an arrangement with you.

What if there is a large drop in rates? There may be room to negotiate with the lender. If the lender is not willing to negotiate, there is an alternative. I can take your loan to a new lender, capitalizing on the large drop in rate. We can lock with the new lender at the lower rate. Now, this does not sit well with the first lender. If this becomes a habit, the lender may stop doing business with me. But, looking out for the best interests of each borrower, it may be necessary to take this action.

What if there is a major change to the loan program? The loan lock could be canceled. A new arrangement must be made with you and the lender. This time, it will be based on the new loan program. Lets look at an example.

EXAMPLE: 30 year fixed rate locked for 30 days

A conforming loan is locked at 4.5%. A major change occurs. The loan is no longer conforming. The change is a larger loan amount. Now, the loan is a Jumbo. The 4.5% interest rate lock will not carry over to a Jumbo loan. The Jumbo loan will likely be over 5% interest rate. Why? Because it is an entirely different loan program with different risk elements. So, what happens? A new rate lock arrangement must be made by you and the lender. This time on a Jumbo loan. Beware, the lender will look at the initial lock of 4.5% and current market conditions. Whichever day has worse interest rates will be used for this new lock commitment. This is known as “worse case pricing”.

You do not need 20% or more for the down payment to buy a house here in the state of California. If qualified, you can buy a house with little as 1.5% to no money down.

There are available home loan programs like the CalHFA, VA, FHA, and USDA loan that allows a buyer to purchase a home with little or no money down. For example, the first time homebuyer (no ownership in the last 3 years) can qualify for the CalHFA program. This program has zero down payment plus closing cost assistance. The loan amount must be $453,100 or less. If greater than $453,100 a very small down payment is necessary (watch this video). Moving on, the FHA requires at a minimum of 3.5% down of the purchase price and the Freddie Mac Home Possible and Fannie Mae's Home Ready purchase programs allow as little as 3% down of the of the purchase amount. If you read this far, you may have learned, there are many zero or low down payment options available.

If you require some assistance for the down payment go to this link here https://kenlends.com/apply-now/. Complete the short inquiry form to see what down payment assistance home loan programs are available in California.

Call me direct or text me and let's begin your path towards homeownership in California.

https://www.facebook.com/KenLends1
https://www.youtube.com/channel/UCO5Cn6cHAybqKacihSsprJw
https://twitter.com/KenLends1
https://www.instagram.com/kenlends1/
https://plus.google.com/s/KenLends
https://www.linkedin.com/in/kenlends/
https://KenLends.com

I Welcome the Opportunity to Assist you with a CalHFA, VA, Conventional, Conventional High Balance, or Jumbo Purchase or Refinance Home Loan.

I appreciate the opportunity to discuss your home loan needs.

Ken Greene
Licensed Broker
NMLS #234239
Ken@KenLends.com
www.KenLends.com
714-402—3418 cell
244 Magnolia Street
Costa Mesa, CA 92627