Everyone wants a great rate on their mortgage, right? When rates dip and there’s an opportunity to use the VA streamline refinance program, it’s time to lock that rate in and lower the monthly payments. And when purchasing a home and using a VA loan to finance the property, there is a specific date scheduled for the closing. Your rate needs to be locked in before the closing date in order for your lender to process the closing papers. But what if your rate is about to expire and your lender isn’t finished with your loan approval. What can you do?
The first thing you can do is to make sure whenever the lender asks you for additional documentation, don’t tarry. When your rate is locked and you take your time getting the rest of your paperwork in then your rate can expire and it won’t be the lender’s fault. When a rate lock expires, the borrower is typically relegated to the higher of the locked rate or the current rate. A lender won’t allow you to let a lock expire in order to take lower market rates.
If you do need additional time to get your loan papers to closing and you do want to keep your existing rate lock, ask your VA lender for a lock extension. There are no universal VA guidelines regarding interest rate locks that lenders are required to follow but instead are responsible for issuing their own rate lock policy. Some VA lenders will grant an automatic extension for say one to three days at no charge if rates are higher than the locked rate. If rates are lower, the lender will simply proceed with your approval based upon the original lock.
For longer locks, say anything beyond just a few days and the delay is not the lender’s doing you can expect to pay ¼ of a point for an extension of anywhere from 10 to 15 days. Lenders take locks just as seriously as you do. Don’t delay getting your documentation to your lender.