Mortgage Rate Lock Ethics And Penalties

by No Regrets from USA

Regarding mortgage rate lock ethics and penalties: Hi Kate, So, a homeowner locks in a mortgage rate lock with a broker just to find the rates plummeting afterward. Assume you know that if you switch lenders your broker will be penalized. The question is, is it ethical or unethical to switch?


I feel that in this situation, it's ethical to switch lenders to get the better rate. Unless you've signed a contract with the broker that you will definitely go with their rate then it's perfectly fine to let them know that their locked rate is no longer competitive.

I employed a mortgage broker on my house years ago. He did a lot of work, put together a quote and we were moving forward. There was no official mortgage rate lock but he had made a firm bid. I got a better offer direct from a lender and so I told the broker the deal I got, gave him a chance to beat the offer and went about my life with no regrets.

It's just business and it's definitely ethical to shop around until a contract has been signed.

Kate Answers: Mortgage Rate Lock Ethics And Penalties

Dear No Regrets, An additional thought - When locking in an interest rate, everyone should receive a mortgage rate lock agreement. I would encourage borrowers to peruse the form to see if what the agreement entitles them to and what the form obligates them to.

When it's time to consider your mortgage rate lock, don't miss Kate's view on mortgage rate lock.

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Best Wishes,


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