What is a Mortgage Rate Lock?
Mortgage rates change. They move up and down frequently - sometimes daily. Because of this, the rate you see when you first apply for your mortgage may not be the rate you end up with. That’s where a mortgage rate lock can help.
Your mortgage rate affects the amount of your monthly mortgage payment. Even a small rate change can make a big impact over the life of your mortgage loan.
So what exactly is a mortgage rate lock and how do you get one? Many Mortgage Lenders offer rate–lock agreements which guarantee that the rate you’re given at the time of your application will stay the same even if mortgage rates in the market change. With a mortgage rate lock, you keep your lower rate even if market rates go up. However, if rates go down, you could be stuck with the higher rate.
Some rate lock agreements come with a float down option. With a float down option if rates go down you get the lower rate and you are still protected from rising rates. However, many Mortgage Lenders charge for the float down option. The typical cost of a rate lock with a float down option can be anywhere from $350 to $500.
One of the biggest benefits of using a rate lock is having peace of mind. Locking in a mortgage rate that you’re comfortable with takes some of the guess work out of the mortgage process. If you know you can afford the mortgage payment at that rate, it might be worth it to lock it in, especially if mortgage rates are rising.
Rate locks don’t last indefinitely. They are usually good for one or two months. Some Mortgage Lenders will allow you to extend your rate lock for a fee. It’s best to have some idea about how long it will take you to close on your mortgage. If your rate lock expires before you close your loan, your rate will be whatever the current rate happens to be.
Now that you know a little about mortgage rate locks, you should talk to your Mortgage Lender about their rate lock policy.
How can Florence Bank help?
We’re excited to offer a new pre-approval with rate-lock option that’s beneficial to people who are currently shopping or thinking of shopping for a home in the near future. With this new product, we will automatically lock in the interest rate for 120 calendar days at no cost at the time of your pre-approval application.* This will allow you the time to get approved, shop for a home and close your loan. Should interest rates decrease during the process, the Bank will re-set your rate at no cost, on the 10th business day prior to the closing date.
Applying for this new pre-approval with rate-lock option alleviates your concern of rising rates, while giving you the comfort of knowing you are now pre-approved, have ample time to shop and close on your home.
So, whether you’re ready to buy a home now or in the near future, let us help you finance the home of your dreams at a cost that fits within your budget. We’re always here to help. Stop in to any of our 11 branches or call our Customer Service Center at 413-586-1300 to speak to a Mortgage Specialist today.
Interested in learning more about Florence Bank's pre-approval rate lock?
*Subject to credit approval, pre-approval with 120 day rate lock for 30 year fixed rate or 5/1 adjustable rate loans with minimum 20% down payment on qualifying single family owner occupied residence located in MA only. To guarantee 120 day rate lock, a qualifying property must be identified and mortgage application submitted by the 75th calendar day from the date of the rate lock agreement.