FAQ : What Is A Long-Term Lock Program For New Construction? Where Can You Get One In Omaha?
When we are working with clients who are interested in newly constructed homes, we often get asked about long-term lock programs for them. One of our partners, Michelle Ringsdorf at MB Financial Bank, recently sent us some information and today we are sharing a few of her thoughts on the blog.
What Is A Mortgage Rate Lock-In?
A lock-in, also called a rate-lock or rate commitment, is a mortgage lender’s promise to you, the buyer, to hold a certain interest rate and a certain number of points for you. This is usually for a specific amount of time, while your application is being fully processed and until you close on your new property.
“Points” are additional charges imposed by the lender that are generally prepaid by the buyer but can sometimes be added into the full mortgage amount.
Mortgage lock-ins are useful because it can sometimes take weeks for all of the documentation to be prepared to complete a mortgage (remember, this is a MAJOR purchase!) and during that time, interest rates may change.
While this is to your advantage in the case of increasing interest rates, should interest rates go down, be sure that the lender you are working with also provides for any interest rate decreases so that you can take advantage of those with your locked-in agreement.
What Are the Features Of A Long-Term Lock Program For New Construction?
A long-term lock program for new construction may cost more and require an up-front deposit. Lenders can walk you through the deposit rates, as they vary greatly depending on the market at any given time.
Is it always worth it? In her article, “New Construction: Should I Do A Long-Term Mortgage Rate Lock?,” Gina Pogol states that: “If the thought of runaway mortgage rates makes you nervous, you’ll be well-served to execute an extended mortgage rate lock with your lender - there’s something to be said for peace of mind.”
Are Long-Term Locks Also Available On Existing Homes?
Long-term locks should not be confused with pre-approvals when house hunting.
Where Can You Get A Long-Term Lock Mortgage In Omaha?
While this isn’t the only institution offering long-term lock programs in Omaha, we are giving Michelle a shout-out since she sent us the information. MB Financial Bank offers a Long-Term Lock Program.
If you and your family are getting ready to start house-hunting for a new home or are preparing to sell your home, contact the Fairfield Team and we can help you get started and answer any questions about Omaha real estate!