What happens when you lock in your rate for say 30 days and the lock expires before your closing can take place? In most cases, you will get the higher of your locked rate or current market rates. If you locked in at 3.50% and rates are now 3.75%, 3.75% is your new rate. Lenders are required to provide their lock policy guidelines when you first apply for a VA loan application and this will be explained in the disclosure. But sometimes you won’t get the higher rate. Sometimes you’ll get what you thought you were going to get regardless of any lock period or prevailing rates. How?
Lenders won’t lock in your rate without your express written permission. Your lock should be just long enough to cover your loan from processing to final closing and no more. You might want a little wiggle room just in case but the bottom line is the longer the lock the more expensive it will be. Most lenders have standard lock periods such as 10, 15, 20, 30 and so on. There is no universal requirement but that’s pretty standard.
However, if your lender drops the ball and your lock expires due to the fault of your lender, lenders will typically honor your rate. What sort of events can cause a lender to delay? Many times it’s simply making a mistake or overlooking an important milestone. For example, you applied for a VA loan and provided a signed sales contract but the lender didn’t order the appraisal for two weeks and the appraisal didn’t arrive until one week before your closing. If however there are third party delays not the fault of the lender, don’t expect any rate extension. If rates are higher than your locked rate, lenders can offer a short term extension for say two or three days. If you’re getting close to your closing and a bit nervous about your rate, talk to your loan officer to be clear on your options.
