Refinancing Advice Break Mortgage Rate Lock

by US Homeowner With Question

Refinancing Advice - Do I Break My Mortgage Rate Lock Hi Kate, Two weeks ago we locked in a mortgage refinance rate of 5.25%. Normally rates don't change much in the time between a lock and closing, but these are extraordinary times, and rates are probably below 5% now.



With most people expecting the Fed to drop rates by 1/2 point today, I'm wondering whether I should break our mortgage rate lock. My guess is that our lender will say no -- I imagine that he doesn't have a "float down" provision.

We've paid a $350 nonrefundable deposit, but could we be responsible for other fees as well? There was a $350 appraisal. For which other closing costs could we be held responsible?

Can you give me some refinancing advice for a mortgage rate lock? Signed, US Homeowner With Question

Refinancing Advice - Do I Break My Mortgage Rate Lock

Dear US Homeowner With Question,

In the short amount of time since you wrote, the Feds did indeed lower their funds to a half percent. Yes, I agree with you. These are extraordinary times!

States can have different practices concerning mortgages in addition to federal regulations. So check with your own state concerning fees owed if you cancel your mortgage application.

Read through the packet of paperwork you received within three days of making loan application. You should be able to find your answer there. Otherwise, enlist the help of a real estate agent or friend.

Don't be too quick to write off your lending company. They may have a new float down provision. Again, as you said, these are extraordinary times.

In addition to checking with your lender regarding a solution to rates dropping after a mortgage rate lock, consider the following before acting:
  1. Breaking a rate lock without another in place could jeopardize your refinance.

  2. Ordering new credit could lower credit scores and increase, not decrease, your interest rate.

  3. A second mortgage lender could require a new appraisal but if values in your area are dropping, your refinance may end up worse, not better.

Resist The Mortgage Rate Lock Hysteria

A certain hysteria begins to prevail during times like this. We saw it after 911. My refinancing advice? Take a deep breathe and map out a game plan. Resist the hysteria that surrounds interest rates right now.

Perhaps that means staying with your current lender. Could it mean asking your lender for alternatives? Yes and it could also mean switching lenders. Only you can answer these questions as they relate to your refinance.

I wish you the best of luck and hope you'll come back to my website Get-Your-Best-Mortgage-Rate again in the future. Of course, all of my information is free.

So remember to bookmark Get Your Best Mortgage Rate to your favorites and visit often for up to date homeowner tips, news and refinancing advice. You can also invite friends to comment on this page or create a page of their own like you did.

Best Wishes,

Ask Kate how to get the best mortgage rates
Ask Kate




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.



Return from Refinancing Advice Break Mortgage Rate Lock to Get Your Best Mortgage Rate


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