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Mortgage Interest Rate Lock: How Does It Work? - YouTube
Channel: News For Reasonable People
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I'm Sean Reynolds the owner of some of
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properties Northwest and Reynolds and
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Kline appraisal and today I have with me
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mr. dan Chapman from fairway independent
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mortgage and we're kind of doing just a
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quick question and answer session on we
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hear all the time locking and interest
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rate what does that mean so Dan sure
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what does that mean when you lock your
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rate I mean you're you're you're locking
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in that rate for a specific period of
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time and so let's say you're gonna close
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your loan inside of 30 days we would do
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a 30 day lock and you're guaranteed no
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worse than that rate and so you're
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locking in your interest rate for your
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mortgage
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yep that you're gonna be getting yep and
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you're guaranteed no worse than that
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rate you can actually extend that lock
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if you need to
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so there's lock extensions and you can
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actually with the small possibility that
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your rate can improve even though you've
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locked it in but it's no worse than that
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rate and so is there a cost to locking
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in a longer yeah the more the longer the
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lock 45 60 90 day the there the the more
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expensive it would be to get that that
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rate I mean it's the simplest way I can
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explain it is the shorter the lock the
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lesser closing cost typically on that
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rate there is so because you are
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reducing the risk to the lender of
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interest rates changing because the
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longer the time period right loan goes
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right the more probability maybe rates
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go up right now it's not a big
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difference between the 30-day lock and a
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45 it's so my new that you know the rate
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no points that might be the same that
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day okay but on a 60 day lock it can be
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a difference and how does a buyer
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actually go about locking their interest
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rate well when we get a purchase
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contract or a refinance you know you
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know some loan officers will get the
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loan in and just lock lock it right away
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you know I obviously will give my
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clients different options because
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there's different rates that you can get
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there's there could be two or three
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different options based and there's
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different set of closing costs for each
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so we talked about it and I advise them
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on you know hey it's it's actually a
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really good time to lock or you know hey
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I'm looking at the market I think things
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might get better if you want to wait a
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little bit we can hold off unlocking but
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sometime we could save you some money so
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there's there's and then basically it's
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just a matter of lock-in it
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we hear the term going along on that we
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hear the term floating the interest rate
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floater lock yeah
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so voting is you're not locking up front
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once you get the loan and you're waiting
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we would send disclosures out and get
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things in process but we would lock the
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rate like I've got a couple loans Cola
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right now that I haven't locked the rate
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on yet is there a benefit to locking the
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rate right up front or a benefit to
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maybe waiting longer in the loan process
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yeah it just depends on what's going on
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with the mortgage market and rates and
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how they're how they're priced right now
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and the economy it's a lot of factors
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like you know if you've got right now if
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somebody's got a loan and they're gonna
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be closing less than say 21 days away I
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would I would be locking them but if
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they're closing or if it's a refinance
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and they're you know looking to maximize
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savings as much as possible then we
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could we could float you know I
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subscribe to a service that talks about
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that gives me recommendations from you
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know an expert on Wall Street you know
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so a lot of this has to do with which
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way we think rates are going yeah and
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they trend they're trending downs are
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there they're trending down for the most
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part right now okay so we don't see any
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I mean we will get day-to-day
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fluctuations in pricing just like the
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price of Amazon or Facebook stock can
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change daily spoken rates but you know
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for the most part we're not training up
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like we were last year this time we're
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slowly trending down okay so that's a
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good thing especially for borrowers and
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so you need to have a good loan guy yeah
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to kind of give you an idea the market
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and what's going on and and and knows
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knows when to lock I don't have a
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crystal ball but I have a pretty good
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gauge on it right and you guys have at
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fairway independent mortgage you guys
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have a some kind of rate lock program
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yeah Oh lock and shop yeah lock and shop
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so lock shop and go technically and what
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that means is if you get your
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pre-approval done and then we then send
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it to get approved like your loan is
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approved whether maybe haven't found a
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property yet so we sent it to what's
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called a TBD approval to be determined
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approval underwriting is underwritten it
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then we can then lock your rate for 90
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days it's no cost upfront that's all it
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is is insurance and it's free so we lock
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your 8 it's a little higher than the
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current market rate but it's locked for
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90 days
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it's guarantees you know worse than that
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rate so if rates do for some reason jump
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up and you get the lower rate because
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you locked it you're not getting the
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current market rate but if you find a
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contract say 30 days later you get a
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contract on a property and you're gonna
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close that we then give you the lower
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the two so you market rate okay or the
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rate you locked so what was it called
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again it was lock shop and go up and go
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I just call a knocking shop but yeah
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yeah that's pretty good yeah anything
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else that you can tell us about locking
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an interest rate that might be really
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important for either real estate broker
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that's got a buyer client or the buyer
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themselves you know if it's new
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construction I get that a lot like you
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know you've got new construction and
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it's you know I've got one right now
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it's closing in into July I have it
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locked me out because REITs are trying
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again so the home is not finished it's
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still being constructed yeah yeah it's
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gonna yeah we're gonna close on that at
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the end of July so I haven't locked me
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out but you know you want to be careful
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lock expiration dates if you do because
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you know you've got I've got one closing
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here in a few weeks that I've locked and
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it's close to that expiration but you
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know just make sure the builders
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sometimes don't close when they say
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they're gonna close in what and so if
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you've locked it for say 60 days and the
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Builder said they're gonna close on day
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61 you might be in trouble right okay
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with that lock extension right so you
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might incur a lock extension fee ahead
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of that okay so just keep that in mind
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and once you've actually locked your
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rate have that date in mind the real
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estate broker needs to have that dated
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mark out yep borrower needs to know yeah
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everybody needs to know what's going on
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in the picture you know and make sure
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that the builders not going to be too
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far pushed out okay very cool I think we
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have a better idea of kind of what that
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terms means and what it actually means
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as
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implication to the buyer who's a loan in
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process yes all right
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well Dan thanks so much for explaining
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that again I'm Sean Reynolds from Summit
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properties Northwest and rental decline
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appraisal Dan Chapman from fairway
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independent mortgage then yep here's the
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summit difference we offer an industry
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high 80/20 split with absolutely zero
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fees a low ten thousand dollar cap and a
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free listing video including drone for
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every single home that summer properties
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Northwest lists for more information
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click on the first link in the
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description of this video
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