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VA Loan Rate Lock

By: Grant Moon 01/19/13 04:01 pm

VA Loan Rate Lock

As you search the web for the best VA loan rate you’ll find that interest rate quotes can be all over the map.  Some rates will have points and some will not.  Some rates will be higher and some will be lower.  It can be a very confusing process.  But one thing all lenders have in common is specific guidelines for granting a specific interest rate to a borrower.

When lenders guarantee a mortgage rate to a borrower, they do so with care.  If the interest rate is locked in and for some reason does not close, it can cost the lender money and over the long term increase the cost of their own funds used to close a mortgage.

This process is called “locking in” your rate by your lender.  And lenders will all follow general lock policies. What are they?

Application on File

Before a lender will lock in any loan they want to see that they have a real deal on their hands. This means before a borrower can lock in an interest rate the lender must not only have a loan application on file but also required documentation from the borrower.

Completed Information

A lender may also require that a property be selected and listed on the loan application.  A lender will also require that the borrower’s complete name, social security number, income information, property value and loan amount be on the application.  A loan application with a property address listed as “To Be Determined” will typically not be locked by a lender.

Credit Report

A borrowers’ credit history will also be reviewed prior to locking in a mortgage loan.  Most VA lenders have minimum credit scores for VA loans and won’t lock in a rate for those currently not credit worthy.

Lock in Agreement

Many VA lenders issue a lock in agreement for the borrower to review, sign and return to the lender, acknowledging their understanding of the lender’s lock rules.

Lenders take lock in agreements very seriously.  If they don’t, it can make them less competitive in the marketplace.  You should take lock agreements seriously as well. Make sure you understand all the requirements for locking in an interest rate to avoid any unpleasant surprises down the road.

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