Rate Locks FAQs
What impact might an economic downturn have on a borrower’s fixed-rate mortgage?
The economy will have an influence on mortgage rates prior to locking and protecting a mortgage interest rate; however, once the rate is protected there is no affect on a fixed-rate mortgages. By law, the terms of the securitized note cannot change once the loan has closed. Conversely, mortgages with adjustable rates can be affected by economic ups and downs
At what point is my mortgage interest rate protected?
A common misconception is that your mortgage rate is protected upon application. This is not necessarily the case. The application for the mortgage and the rate protection are two distinctly separate actions. Depending on your circumstances and advice from your NJ mortgage lender or financial planner, you may choose not to lock (Float) your interest rate at your application. Your
How long is my interest rate protected?
The length of rate protection is dynamic in nature and usually can be adjusted by your New Jersey mortgage lender to accommodate your circumstances and your expected closing date. Usually, they come in 15-day increments and most standard rate locks are 30, 45, or 60 days. That said, the shorter the rate protection, the more favorable the terms may be.
Can I get a lower rate if rates improve while my New Jersey mortgage application is being processed?
Most New Jersey mortgage lenders will allow for a “Float Down” of your interest rate once the initial rate lock is set. That said, there is usually some kind of cost. Generally, the lender may charge 1/4-3/8 points in fee for the privilege of floating down or may simply float your rate down to the current market rate + 1/8%.