Interest Rate Locked

by Julian
(Miami, Florida USA)

Ask Kate about changes in an interest rate that's locked: Hi Kate, I have a signed interest rate disclosure document showing a 4.5 percent interest rate locked and 0 discount points.

Julian continues... Now the bank says I have to pay points because the appraised value of the house is lower than what they originally estimated. Can they do that? Thanks.

Kate Answers: Interest Rate Locked

Ask Kate at
Dear Julian,

No one likes surprises, especially in an interest rate that's locked.

Now if you know much about me, you know changes to a mortgage interest rate after it's been locked are a hot spot for me. So I don't take your question lightly.

But this is more about the value of your house than it is about changes to an interest rate that's locked.

The amount of the mortgage compared to the value of your house, for short this is called loan-to-value, affects the interest rate. The higher the percentage of the value borrowed, the higher the interest rate.

So when your appraisal reflected a lesser value, your loan-to-value percentage increased. Sad to say, this raised your interest rate.

So now what? Well, you have a couple of choices.

1 - You can buy down your rate by paying points.

What are points?

Points are prepaid interest. In other words, to get a lower rate over the long term of your mortgage, you pay part of that interest upfront in points.

2 - Your second choice is to avoid paying points and take a proportionately higher rate. You'll see why I liken rates and fees to a balloon when you go to Reducing Mortgage Closing Costs - Little Known Secrets. This will help you make an informed decision.

Julian, I have also included more help at the bottom of this page to give you an insider's look at locking mortgage rates.

Best wishes in your refinance,

Ask Kate

Click here to comment on Interest Rate Locked

If you still have questions regarding Interest Rate Locked, write me at Ask Kate where every question is a good question.

Return to Get-Your-Best-Mortgage-Rate from Interest Rate Locked

Click here to post comments about Interest Rate Locked.

Finding Help for Locking Rates

My Interest Rate Lock Guarantee - Help for timing your rate lock.

The best solution to avoiding hidden fees is to ask the right questions before you lock mortgage rates.

Get mortgage broker fees in writing or your rate lock is meaningless!

How good is a mortgage interest rate lock guarantee?

Yield Spread Premium is a common reason for losing your rate lock.

Questions to ask before you lock.

Search questions and answers at Ask Kate Mortgage Rate Lock Center I.

More questions and answers at Ask Kate Mortgage Rate Lock Center II.

Help Spread The Word

I depend on word of mouth! So please help me spread the word by sharing Interest Rate Locked with your friends using these easy social bookmarking buttons. Please come back and visit often.

Click here to add a comment.

You can also ask Kate about your mortgage at Refinancing Advice The Nuts and Bolts.

Recent Articles

  1. Kate's Mortgage Rate Report August 11: Rates Bouncing Like a Ping Pong Ball

    Aug 11, 16 10:49 AM

    Kate's mortgage rate report for the week ending August 11, 2016: Rates Bouncing Like a Ping Pong Ball
    Mortgage interest rates have been bouncing like a ping pong ball: After last Friday's strong job report began pushing up mortgage rates, the market is now hinting at a reversal, with the 30-year hover…

    Read more

  2. Ask Kate how to avoid unauthorized mortgage rate extension fees

    Aug 11, 16 10:18 AM

    Ask Kate how to avoid unauthorized mortgage rate extension fees
    Ask Kate how to avoid unauthorized mortgage rate extension fees:

    After locking in her rate, the bank sent a Texan homeowner, Laura, notification of several thousand in fees that she must pay in order…

    Read more