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Understanding Mortgage Rate Locks When Refinancing

If you’re refinancing your home to take advantage of today’s low refinance mortgage rates, the topic of rate locks is going to come up. Should you lock, when do you lock, and is there a fee for locking are all important considerations when mortgage refinancing. Here’s an article on MortgageLoan.com with the basic of refinance rate locks that you need to know:

What are mortgage rate locks and how do they work? Basically, they’re a written promise by a lender to offer a certain interest rate for a specific length of time, usually 30 to 60 days. So if the lender is currently offering 30-year fixed-rate refinancing at 3.95 percent, a 30-day rate lock would guarantee that rate will be available for the next 30 days.

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As the article states the rate lock not only guarantees your refinance mortgage rate but the terms you’ll have to meet to get that interest rate. The rate lock isn’t a binding contract, it simply specifies the rate, discount points, and other terms that must be met to get the specified interest rate.

Mortgage approval can take weeks to work through red tape and the rate lock can protect you from rising refinance rates. Should you pay for a rate lock? The only time a lender can really (almost) justify charging you a rate lock fee is when you’re locking for an unusually long time frame, say forty-five to sixty days.

Rate lock fees are something you can negotiate as it costs the lender nothing to guarantee your refinance rates and set terms. Rate lock fees are considered junk fees by many and do nothing but drive up your closing costs unnecessarily.

Remember the more you pay closing on your mortgage refi the longer it’s going to take to break even recouping your out-of-pocket expenses. The more you pay the more difficult it is to get your money back, even impossible if you’re paying too much for mortgage refinancing.

You can learn more about locking today’s best refinance mortgage rates without paying unnecessary fees or discount points by checking out my free Underground Mortgage Videos.

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