What is a rate lock?

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What Is a Rate Lock?

• Dunhill Homes

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Why Is a Mortgage Rate Lock Crucial?
A rate-lock is very important since it will
protect you, as a buyer, from any interest-rate
increases that might occur while you journey
through the home-purchasing process.  If you were
to fall victim to higher interest rates without a
rate-lock in place, you would likely pay more for
a down-payment in order for your monthly mortgage
payments to remain within the parameters a lender
may have already established.  With higher
interest rates, you could also be subjected to
paying additional
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What if Interest Rates Fall?

• You can include a float down stipulation in
  the original terms of the lock.  Aside from the
  lender being obligated to provide the locked-in
  rate even if rates were to rise before closing,
  the float-down also ensures you can re-lock
  your interest at an even lower rate if the rates
  were to go down further.  Locks are not
  cost-free and a float-down provision would, as
  one would expect, increase the price of the lock
• You can, simply, reconfigure the rate lock for
  an additional fee

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Are There a Variety of Rate Lock Provisions?
Provisions included in a given rate-lock are not
a one-size-fits-all.  You want to make sure the
language within the provisions of the lock is in
writing and will tailor-fit your needs.  Basic
inclusions in a rate-lock contract would include
the time-frame of the lock including the
beginning and ending date and the time, the
interest rate, points, costs, post-lock options,
etc.  If the buyer were to fail to complete the
home purchase before the rate-lock expires, that
buyer would be subjected to accepting any higher
interest rates that might exist
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• Thank you.

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ck/