Connecticut Mortgage: How Do You Lock a Rate?

Hello everyone, this is John Vecchitto a local loan officer with North-East Financial located in Middletown, CT. Today I would like to talk to you about rate locks and how they work.

What is a rate lock?

A rate lock is defined as an agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage over a specified time period at the current interest rate at that time. Whenever a loan is not locked, it is considered floating. This means that during the loan process your initial interest rate can either rise or fall according to market conditions. For example, the rate when you begin the process may be 4.25%, but may be 4.5% at closing.

Why should I lock in my rate?

Everyone I speak to wants a low rate- whether they are purchasing a home or refinancing. The problem is rates change every day, and sometimes even throughout the day. By not locking in a rate, your rate floats and you’re at the mercy of the mortgage market. Let’s say your a person whos debt-to-income ratios are tight. There is a chance you could potentially not qualify for that loan anymore because of a higher interest rate and payment.

What are the costs of locking in a rate?

There are no costs involved when locking in a rate initially. If your rate lock expires and you need to extend the rate, there may be a cost for that. If you’re someone who needs more than a 30 day lock, lenders will typically charge a slightly higher interest rate for that particular product.

When should I lock in my rate?

I always recommend locking in a rate when you first apply for a mortgage, especially if it’s a good rate. This will guarantee you a rate you’re comfortable with during the entire mortgage process. If you’re someone with a high debt-to-income ratio like my previous example, locking in a rate quickly is especially important.

How long should the lock last?

Once you have a rate locked in, you’ll want to talk to your loan officer about how long to lock the loan for. Typically a rate lock will last for 30 days, however here at North-east Financial we offer 45, 60, and 90 day locks as well. Although the interest rate may be slightly higher with these longer term locks, remember that you are locked in and the rate cannot go any higher. These may be applicable to people with Hubbard clauses on their homes due to the different variables in the transaction.

Here at North-East Financial we work with all kinds of borrowers and pride ourselves on finding the right solutions for every client. Because we are a mortgage broker and correspondent lender, we have the ability to check several different banks for the best rate. If you’re interested in learning more about today’s rates and rate locks, contact me today! I can be reached by cell, 860-918-0251, or send me an email, johnv@northeast-mortgage.com.

John Vecchitto / Loan Officer
NMLS# 1127163
210 S. Main St. First Floor
Middletown, CT 06457
860-918-0251 (Cell)
860-788-7237 (Office Phone)
johnv@northeast-mortgage.com
Company NMLS 117273