PA Mortgage Network

TIP: Don't make any adverse changes to your financial "picture" during this time between approval and closing. Innocent mistakes range from applying for a new department store credit card, to purchasing a refrigerator for the new house, to buying a new car, to quitting a job to go full-time into a new business. When you supply us information to help verify your income, employment, assets and credit history, we will obtain a credit report directly from the credit bureau.

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For people interested in buying a home, refinancing a mortgage or applying for a home equity loan or line of credit in Pennsylvania. Great rates with superior service.

<< Frequently Asked Questions (FAQ)

What is a rate lock?

You must close a mortgage loan by locking in an interest rate. The four key elements to a rate lock are loan program, interest rate points and the length of the lock.

The longer the length of the lock, the higher the points or the interest rate because the longer the lock, the greater the risk for the lender offering that lock.

After a lock expires, most lenders will let you re-lock at the higher of the original price and the originally locked price. In most cases you will not get a lower rate if rates drop.

Lenders can lose money if your lock expires because they are taking a risk by letting you lock in advance. If rates move higher they are forced to give you the original rate at which you locked. Lenders often protect themselves against rate fluctuations by hedging.

Some lenders offer free float-downs whereby you can lock in a rate and if the rates drop while your loan is in process, you will get the better rate. The free float-down is costly for the lender and you pay for this option indirectly, because the lender has to build the price of this option into the rate.

If rates drop after you lock in, most lenders will not move unless rates drop substantially (e.g., 3/8%+). It is expensive for lenders to lock in interest rates. If they let you improve your rate every time rates dropped, lenders will spend a lot of time relocking interest rates, since rates fluctuate daily. In addition, they would have to build this option into their rates and you would end up paying a higher rate.

Lock-and-shop programs are helpful when rates are rising. Most lenders let you lock in an interest rate on a specific property. If you are house shopping, some may offer a lock-and-shop program that lets you lock in a rate before you find one.

Most lenders offer long-term locks for new construction. These locks do cost more and may require an up-front deposit. Most long-term new construction locks do offer a float-down (i.e. if rates drop prior to closing, you get the better rate).