What Happens If the Lock-In Period Expires?

Part 6

This is part six of a nine part article on the understanding of Mortgage Lock-Ins.

What Happens If the Lock-In Period Expires?

If you do not settle within the Lock-In period, you might lose interest rate and the number of points you had Locked-In. This happens when delays occur in processing in which you are the cause. It could also happen if others are involved in the settlement process, or it could be the cause of the lender. Should your  Lock-in expire, most lenders will offer the loan based on the prevailing interest rate and points. If the cause of the delay was due to the market conditions, the lender may charge you more for the loan. Lenders also may not be able to continue to offer you the Lock-In rate due to they can no longer sell the loan to investors at the Lock-in rate. Loan approval delays can cause Lock-In period to expire. Sometimes lenders have to wait on documents by you or from others such as employers, appraisers, termite inspectors, builders, and individuals selling the home. Sometimes it is the lenders fault for the delay if the loan demand is heavy. Interest rates falling suddenly also could cause delay.  When lenders lock in loan terms for you, they often have an agreement with investors to buy the loan based on the Lock-In terms. This agreement may expire around the same time that the Lock-In rate expires and the lender may be unable to afford to offer the same terms if the market rates have increased. Lenders who intend to keep the loans they make have more flexibility in these cases where settlement is not reached before the Lock-in expires.

This and many other helpful consumer articles may be found at www.debtkiller.com or by reviewing Janna's many regular personal financial updates at her blog, http://jannajones.blogspot.com