Extended Mortgage Rate Locks

In our current housing market, uncertainty is reality. Brunswick, Saint Simons Island, and Jekyll Island in Glynn County are no exception. Rising home prices and rising mortgage rates have put many buyers ill-at-ease. Capital City Home Loans offers an extended mortgage rate lock program that can help curtail some of that uncertainty for our Conventional, FHA, USDA, and VA borrowers.

For new home-buyers, the term rate lock can sound confusing. A rate lock is defined by CFPB as this:

A lock-in or rate lock on a mortgage loan means that your interest rate won’t change between the offer and closing, as long as you close within the specified time frame and there are no changes to your application. Mortgage interest rates can change daily, sometimes hourly.

This simply means that your lender has committed to a certain rate at a certain cost for a certain number of days. Typical rate locks are offered in periods of 15, 30, 45, and 60 days. As long as your loan closes and funds in that period of time, you are guaranteed that rate. Most normal purchase contracts rarely go longer than 45 days, so those periods cover most transactions.

However, the lack of available existing housing inventory has pushed many buyers into contracts with new construction homes. These contracts can be scheduled to close as long as 1 year later, depending on the contractor’s schedule. In this case, your monthly payment and interest may not be certain. Many of my clients have taken advantage of our extended rate lock program to lock in a rate 6 months or more in advance of closing.

These extended rate lock programs typically have higher rates to allow the lender to hedge for spikes in the market over that period of time, but there is also an option to exercise a one-time “float-down” option. This means that you have the peace of mind of a capped interest rate, but also the flexibility to float down your rate to market rates if they’re lower at the time of closing.

These options can be complicated, and the programs will vary significantly depending on the lender. Make sure to ask your mortgage professional about these programs, or get in touch with me to discuss your options today.