Rates Drop After You Locked In Your VA Loan?
If rates have started to move where it’s time to consider refinancing your current VA mortgage, then your next step is to make an official VA loan application with a VA approved lender and ask for the VA streamline refinance loan. Your loan officer has closed quite a few streamline loans over the past two years due to the lower rates but you may have waited and waited to see if rates will go down a bit more. But you decided that waiting any longer won’t produce lower rates and you tell your loan officer to proceed with processing your mortgage loan to get your lower rate.
You will provide the requested documentation and the VA lender will order additional services needed but you’ll soon discover that the VA streamline is a much smoother process compared with documenting and getting approved for a VA purchase loan. There’s simply less paperwork involved. Yet once your loan has been completely approved, if you haven’t already locked in your rate, it’s time to. Before your VA lender prepares your final loan documents the lender needs to know if you’re ready to lock in your rate. A lender won’t lock in your rate for you, you must make the request. Since you’ve been waiting for rates to go below 4.00 percent and they haven’t, you decide to move ahead and lock in the current rate.
But what if you lock in your rate then over the next two days interest rates drop another one-quarter of a percent. You locked in but rates went down. What can you do? There are no rules that lenders must follow regarding rates but you will be provided with a lender’s rate lock guidelines when you first apply for the loan. Read them. They will tell you what you might do should rates move up or down after you’ve locked. Most lenders will accommodate a rate drop request as long as the rate moves a certain amount, say by one-quarter of a percent. You may have to pay a small fee before the lender will re-lock you to the lower rate and you’ll only get one opportunity. But if rates move substantively lower after you’ve locked, there may be options.