Los Angeles Mortgage Broker Bill Rayman Explains Mortgage Interest Rate Locks.A typical interest rate lock guarantees your interest rate for 30 days from the date your application is received unless otherwise stated. The lock does not obligate you to the loan nor does it obligate the lender to fund. It merely eliminates the risk of interest rates increasing while final negotiations are in process. If interest rates fall, we may or may not be able to re-lock with the same lender at the lower rate.
Since the lender is absorbing the risk of a potential increase in rates, there is a cost for taking on this risk. Therefore, when you shop for mortgages, a 7% interest rate with a 60 day lock is a better deal for you than a 7% interest rate with a 30 day lock.
Once you submit and the lender receives your application, a lock for that interest rate is established. You will receive a confirmation in your loan approval package. At this point your interest rate will be guaranteed as long as you are approved, and assuming you submit all information prior to the deadlines in the lock.
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