When shopping for a mortgage, the lender may give you a quote for the mortgage interest rate and points they will charge in order to originate your loan; these only represent terms available at the date and time of the quote and may not be available by the closing date (which may be weeks or months in the future).  To ensure the rate and points quoted remain the same until the closing of your transaction, you will need to lock-in the interest rate (also known as a rate-lock or rate commitment).

If you decide to have Aiello & Associates originate your loan and wish to lock your interest rate, we will give you a written lock confirmation from one of our lenders, showing the locked rate and expiration date.

If you elect to lock-in an interest rate, it is best to deal with a lender who provides a written lock-in agreement.  Be sure to read this agreement carefully, some lock-in agreements become void due to actions beyond your control - such as a change in the maximum rate for VA-guaranteed loans, for example.

Lock-in Options: The following lock-in options are common among lending institutions.  Be sure to ask the mortgage lenders you are considering which lock-in options they offer.

• Lock-in interest rates and points.
  This will give you a clear understanding of how much your mortgage will cost. Neither your interest rate nor your points will increase (or decrease) during the lock-in period.  This protects you against rising market conditions, but unfortunately not when rates drop.

• Lock-in interest rates and floating points.
  Your interest rate is locked in, and will not change for the lock in period, while your points may rise and fall with market conditions. With this option, your lender may allow you to lock in the points at the current market rates, some time between submitting the loan application and closing.

• Floating interest rates and floating points.
  This gives you the option to lock in the interest rate at some time between submitting the loan application and closing. This puts you at risk if interest rates and points rise and may not be best for a homebuyer with a tight budget.  However, if interest do drop, you will benefit from the lower rates, thus a lower monthly mortgage payment.

The Cost of Locking-in the Rate: It is not unusual for a lender to charge a fee for locking-in an interest rate and points. This fee may vary depending on the amount of time you want to lock-in the rate (the lock-in period), which normally varies between 12 and to 60 days, or even longer in some circumstances (for a higher cost).  Aiello & Associates does not charge a fee for locking-in your interest rate and points.  However, the lock period you select will determine your interest rate at the time you lock your rate.

The fee may be charged when you lock-in the rate (and is rarely refundable if you withdraw your application; if your credit is denied or if you do not close on the loan); or it may be included in your closing costs.  The amount of the fee and how it is charged will vary among lenders.

The Lock-in Period: Most lenders will offer lock-in periods of 30 to 60 days. Some lenders may only have short lock-in periods.  And still others may offer a longer lock-in period (expect higher fees for longer lock-in periods).

The lock-in period should be long enough for the loan approval process and to allow for any other contingencies that may delay closing, such as; appraisals, inspections, documentation, etc.

The Lock-in Expiration Date: If unexpected circumstances prevent the loan from settling prior to the last day of the lock-in period (whether caused by you or others in the process - including the lender), you lose the interest rate and points that were locked.  Therefore, prevailing interest rates and points are usually charged under these circumstances.

Some of our Lender partners charge one-eight (0.125%) of a point to extend the lock for an additional 10 days.  Be sure to ask your lender before you decide to lock-in your rate and what interest rates and points will be charged if the loan is not closed before the lock-in period expires.