How many times can a buyer lock an interest rate on a new construction,for a mortgage?

Asked by Ct, 08810 Tue Sep 16, 2008

How many times can a buyer lock an interest rate on a new construction? Can the mortgage refuse to allow to lock an interest rate more than once? Is it acceptable? Should a buyer pay for re-lock?
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, ,
Wed Dec 7, 2011
There's no limitation on relocking. However, depending on the reason, you may be charged to do so. Typically that charge equates to .125 or a full .25 of the loan amount.
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Michael Mari…, , Bayville, NJ
Wed Dec 7, 2011
You can re-lock more then once in most cases, but it depends on the original agreement, and lenders.
If you are currently in this construction loan not much can be done. We do offer a one time close construction to perm. loan though. You just fit. Feel free to reach out to me on this. No hassles I assure you because I'm not sure if it can be done until I hear of your current situation and agreements.
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Other/Just L…, , Fleming Fitch Grant, Holly Hill, FL
Tue Sep 16, 2008
Lender answer:

Generally speaking, you may lock an interest rate once.

When you lock a rate, you are asking the lender to make a commitment to deliver your loan upon closing into a specific investment pool with a specific yield on the investment. Lenders will not allow you to re-lock for a lower rate (see exception below) in the same way that lenders do not increase your rate after locking in a rising rate environment. The point of a lock is to freeze the rate for you, the lender, and the future investor during the underwriting process.

Many lenders offer a "float down" options, which allows you to re-lock at a lower rate should rates fall during your lock period. The float down must be specified prior to locking; it may come with a fee; and in general it can be exercised once. Float-down options are typically offered on construction-to-permanent loans since C-to-P lock periods often extend up to a year.

A decision to pay for a float down option prior to locking or to execerise a float down option after locking depends on the fee and the length of time you expect to own your home. In most situations, purchasing a float down option is a wise idea. If you expect to own (or retain the mortgage) for a short period, the fee may exceed the payment savings. Your mortgage sales rep can work out the figures for you both ways to assist in making a decision.
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