What is a Lock Period? |
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Answer:
Because mortgage rates can change day-to-day, mortgage lenders may encourage borrowers to lock in a rate. The typical lock period is 30 days. However, a few mortgage lenders allow longer lock periods - up to 60 days. Unfortunately, borrowers who request a longer lock period pay a slightly higher interest rate. Purchasing a new home can be an arduous process, and it can take up to 30 days for a mortgage loan to close. During this time, mortgage rates can rise and fall. Consequently, the mortgage rate quoted at the time of loan approved may change due to a shift in market rates. When rates are stable, a loan lock is needless. On the other hand, if a borrower cannot afford to pay a higher mortgage rate, lenders suggest a loan lock to help borrowers avoid a possible interest rate increase. Due to mortgage lender competition, 30-day lock periods are only available to borrowers who have shown a commitment to the deal. Before a lender will even consider locking a rate, borrowers must complete a mortgage loan application, have the property appraised, and request a copy of their credit report. Trackback(0)
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