Mortgage Lock-Ins Part 1

When you are ready to buy a home, the first thing that comes to your mind is the word mortgage. You want to look at different lenders for the best interest rate, the lowest points and other up front charges. Now that you have chosen a lender and are about to settle with them, have the terms and conditions that you wanted been applied? For instance, did you get the rate that you wanted? Have your costs gone up? This is when you should be aware of "Lock-In".  You want to lock in on rates and points to make sure that what you wanted is what you actually get. The different parts to this article, parts 1-10 will explain the basics of mortgage Lock-Ins. The entire article can be found at www.debtkiller.com. Look for the article titled Mortgage Lock-Ins. Part 1 This is part one of a nine part article on the understanding of Mortgage Lock-Ins. Lock-Ins Usually the terms that are quoted to you when you were looking for a lender only represent the terms available to borrowers settling their loan agreement at the time of the quote.  Quoted terms may not necessarily be available to you when you settle weeks or months later. Do not rely on terms quoted to you when you are looking for a loan unless the lender is willing to offer you a lock-in. What is a Lock-In? This is known as a rate-lock or rate commitment. This is a lenders promise to hold a certain interest rate and points for you for a specified period of time while your loan application is being processed. What are points? Points are usually additional charges that a lender charges that are prepaid by you the consumer at settlement but can sometimes be financed by adding them to the mortgage amount. One point equals one percent of the loan amount. Most lenders allow you to lock in the interest rate and number of points that you will be charged when you file your application, or during the loan processing time, or when the loan is actually approved, or even later. When you are getting a mortgage, the loan processing time takes time. It is good to have a Lock-In because of the time it does take to do all the paperwork.  It will take time to prepare the note, document the note and evaluate your loan application. It is during this time that the cost of the mortgage usually can change. However, with a Lock-In, your interest rate and points will not change. The Lock-In should protect you of any increases and allow you to see if you can afford the mortgage. You must also be aware that a Lock-In could also prevent you from price decreases, should they occur. Only your lender will be able to undo the Lock-In, should prices decrease, and give you the lower rate that becomes available during your application period. Also be aware that a Lock-In is not the same as a loan commitment. However, some loan commitments may contain a Lock-In.  What is a loan commitment?  A loan commitment is when a lender promises to make you a loan in a specific amount at some future time. This occurs after you have been approved by the lender from a loan application in which you submitted. The loan commitment will state the terms of the loan and that you have been approved. It will state how long the commitment is valid and it will state the lender's conditions for making the loan. Some conditions might be a receipt of a satisfactory title insurance policy protecting the lender. 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