Locking Your Interest Rate

Carolina's Lending Source, Inc. Rate Lock Policy

Q. How often do mortgage rates change?

It's not unusual for mortgage interest rates to change several times throughout the course of a business day.  Why?  Because mortgage interest rates are based on the price and yield of the Fannie Mae long-term bonds.  Stocks and bonds compete for investment dollars, so as stocks decline, bond prices generally improve and mortgage interest rates improve.  When stock rally the inverse occurs.

Q. What does it mean to Lock?

When you lock your interest rate, that rate and corresponding points is frozen in time for the duration of the lock period. 

Q. How long can my rate be locked for?

By default, interest rates quoted on the Today's Rates page are based on a 45 day lock.  For a purchase that means you would need to close before the 45 day period expires.  Refinance transactions carry a right of recission period of three days (Sundays and holidays excluded) after closing.  So your refinance mortgage will need to close four (4) business days prior to the lock expiration.  You can also lock for a period of 21, 30 or 60 days.

Q. Does it cost more to lock for an extended period?

When you lock for 45 days, the lender is hedging that rates will not go up substantially during the 45-day period.  As such, the longer the lock period, the greater the risk and greater risk always equals greater cost.  So longer lock periods carry a slightly higher origination costs.  Here is a cost chart:

• 21 day lock:    1/4% lower origination costs than default 45 day (see "Is it Realistic")
• 30 day lock:    1/8% lower origination costs than default 45 day (see "Is it Realistic")
• 45 day lock:    Default lock period
• 60 day lock:    1/4% higher origination costs than default 45 day

There are certain situations under which a longer lock period is highly advisable.  One such situation is during a refinance when a subordination agreement must be obtained.  Generally, 2nd mortgage lenders take up to two weeks to complete the subordination agreement which puts a 30 day rate lock at risk.

Q. What if I cannot close within the lock period?

• 21 day lock. If you lock for 21 days and are unable to close for any reason within the lock period, then your rate lock can be extended for a period of twelve days at a cost of .25% in points.
• 45 day lock or greater. If you lock for 45 days or greater under normal circumstances and your loan does not close on time, we will extend your lock for 21 days at no costs.
• Special circumstances.
• If you lock for 30 days and you require a subordination agreement (refinances only) and you are unable to close because of the processing time of the subordination agreement, then your rate lock can be extended for a period of twenty-one days at a cost of .25% in points.
• If you lock for any period and you are unable to close for unforeseeable circumstances such as builder delays, appraisal or title issues, employment or income changes, change in credit standing, contract disputes, then your rate lock can be extended for a period of twelve days at a cost of .25% in points.

Q. Is it realistic to lock for 21 Days?

It is sometimes possible to close and fund within 21 calendar days depending on operational tempo, and a 21 day lock will save you a little in closing costs.  So ask your Mortgage Loan Originator if a 21 day lock is advisable in your situation.

Q. What if I am subordinating a current home equity line or 2nd mortgage?

Your current 2nd mortgage lender will require the completed appraisal before a request for subordination can be submitted and their processing time is typically 10 - 14 business days. Therefore it is highly advisable that you lock for at least 45 days. See "What if I cannot close within the lock period?"

Q. What if rates go up or down while my rate is locked?

During the lock period, if interest rates go up, your rate is protected.  Consequently, if rates go down, your final note rate (the rate your payments are based on) will be the locked rate.

Q. Does Carolina's Lending Source, Inc. offer a float down?

At the rock-bottom rates posted on our Rates Page, we do not offer a float down.  If you are interested in a float down option before you lock we can accommodate your request.  Your initial rate will be a little higher and there is a re-negotiation fee of 1/2% (in points) to float down.  Call or email us for current rates with a float down option.

Q. Do I have to pay anything to lock?

There is not a fee to lock, but there is a $500 deposit that will be applied to you closing cost - appraisal first - that must be made before your interest rate can be locked.

Q. Why must I make a lock deposit?

The answer is two-fold:

1. At the point you lock your interest rate, we believe that you have carefully considered your financing options and you have chosen Carolina's Lending Source, Inc. as your mortgage provider.  Therefore the lock deposit confirms your commitment. 
2. At the point you lock, we order your appraisal and immediately incur a cost of at least $405.  The lock deposit covers that cost. The additional $95 goes to the closing attorney as a pre-payment for their services. As long as you close, the $95 will be credited to you at closing.

Q. How do I pay the lock deposit?

Once you have decided to lock, go to Rate Lock Request Form.  Step #3 allows you to pay the lock deposit through the secure PayPal™ webite.  It only takes a couple minutes to pay the invoice online and we will receive the funds within minutes.

Q. Is the lock deposit refundable?

The lock deposit is refundable up to the point either the rate is locked or the appraisal is ordered.  Once either of these events have occurred, the lock deposit is no longer refundable for any reason.

Q. What if I don't like my appraisal?

When your application is pre-approved, the mortgage loan originator uses an estimated value based on either the purchase price (in the case of purchases) or the estimated value you provided on the application (in the case of refinances). The estimated value is not the appraised value. Only an independent appraisal of the property conducted by a licensed appraiser can determine the property value. The lock deposit is used to cover the cost of the appraisal. When the appraisal is completed you will receive a copy. If you are not satisfied with the appraised value, speak with your mortgage loan originator about submitting a dispute. It is important that you understand that once the lock deposit is paid, it is credited back to you at closing, but if you chose not to close for ANY reason, the lock deposit is applied to the appraisal and it is not refunded.

Q. So when can I lock?

Typically, when you are within sixty days of closing you are eligible to lock in your interest rate.  The following must be met before an interest rate can be locked:

Purchase

1. Complete on-line application
2. Purchase agreement with no outstanding contingencies
3. Lock deposit paid

Refinance

1. Complete on-line application
2. Lock deposit paid

Q. How do I lock my interest rate?

When your application is pre-approved you will receive a detailed email outlining your next steps. At that point you can lock in your interest rate.

Go to the Rate Lock Request Form and complete steps one (1) through four (4).  Your interest rate can be locked between 11:00AM and 8:00 PM, Monday through Friday, except holidays.

Rate locks are not allowed between the hours of 8:00 PM to 11:00 AM the following morning and all weekends and holidays.

Q. Now that I have locked, what's next?

After you have locked in your interest rate, you will have 2 business days to return the "Documents to Sign" posted to your personal loan center along with the supporting documentation.  From the point of your lock, we have a relatively short time frame in which to submit your application, supporting documents, appraisal and title policy binder to underwriting.  For more information on returning your application and supporting documents, go to The Loan Process. 

An appraisal on your property will be ordered when you lock.  Because the appraisal is part of a complete loan application that must be submitted to underwriting, please work with the appraiser to ensure the appraisal inspection is completed with three days from the time of locking.  For more information, go to Getting an Appraisal.

Q. What happens to my rate if I do not return the documentation with two (2) business days?

Once you lock in your interest rate, you will receive an email reminder that the "Documents to Sign" and supporting documentation are required within two (2) business days. That's because your complete application is due to underwriting within four (4) business days. If underwriting has not received your complete application within four (4) business days, your rate lock is reset to "Floating" and once your complete application is received and reviewed the rate will be re-locked at the higher of current rates or your original rate, plus .125% to points.

Therefore it is absolutely imperative that you submit the "Documents to Sign" and supporting documentation within two (2) business days of locking your interest rate.