Hey everyone. So let’s talk about rate locks. What does it mean when your loan officer tells you that they’ve locked a rate in for you? Well, interest rates fluctuate with the market, and they change constantly. Sometimes they go up or down several times a day. When you lock-in, you have secured your interest rate for a set period. It’s usually (30) thirty-days, but sometimes it’s (45) forty-five or even (60) sixty, depending on your specific situation.
This protects you against market fluctuations during your locked period. Now a lot has to happen during that (3O) thirty days. Within three days, you have to acknowledge your initial loan disclosures. At the same time, you should have a complete loan application and all of your documentation, like your tax returns, bank statements, etc. into your mortgage broker.
This allows them to submit your loan for approval. Once your loan is approved, you should expect that there will be some approval conditions to meet. Typically conditions are items like letters of explanation for credit inquiries, updated pay stubs, a copy of your current mortgage statement, etc. And after your approval conditions have been reviewed and cleared. Then your closing disclosure will be sent to you for acknowledgment.
We call it the CD. The CD will reflect final loan terms like your loan amount interest rate and the number of funds that you need to bring in or that you’re getting back at closing. About three days after you acknowledge your CD, your final loan documents should arrive in escrow for your signature. Escrow will arrange a signing appointment in front of a notary for you. And once you’ve signed. Your documents will be sent back to the lender for review.
The next step is the funding and closing of your mortgage loan. All of these things must be completed; before your rate lock expiration date. And if you don’t meet the rate lock expiration date, you could be faced with costly rate lock extension fees or run the risk of losing your low rate. This is why it is so important to work with your mortgage broker. And make sure that you’re getting your documentation in quickly acknowledging them to assure a smooth closing before your rate lock expires.
Thanks for watching, and have a great day.