News You Can Use

We’re seeing a strong start to the year – lots of purchases – including increased interest in new construction. Building permits have been on the rise lately which means new homes are on the horizon.  One example of a new community with renewed buzz is Crooked Creek Estates in Union County.   This is a perfect example of a great neighborhood that presents well built homes sold at incredible prices.
 
Current low rates present a fantastic affordability opportunity when purchasing a new home.   One concern people have with building new construction is wondering what rates will do.  While they may get an incredible deal on the price of the home, the cost of the home is variable until they lock in their rate.   But do you know you can lock in your interest rate for up to a year?  You can with our extended rate lock program.

How does an extended lock work?  Basically, you take a 60 day rate lock (for example 3.75%) and add a rate cap based off the length of the lock.  The 30 year fixed rate’s capped rate would be 4.125% for a 120 day lock.  Once we’re within 30 days of closing, a client can ‘float down’ their rate if the market is more favorable at that time resulting in their final loan terms being even lower than at the intital loan application.  

For borrowers interested in ARMs, the terms are slightly different.  If the current 60 day lock for a 10 year ARM is 3.125%, then the capped rate for a 120 day lock would be 3.25%.  The same float down option within 30 days of closing applies as well.

The cost for this program is ½% of the loan amount.  This is not an additional charge but simply a portion of the closing costs paid upfront.   The upfront lock in fee is credited towards the borrower’s closing costs at closing – similar to earnest money or appraisal fees that are collected at the beginning of the loan process.   If a borrower decides to cancel the loan or change the loan type then the upfront fee is forfeited. 

In most cases, an extended lock is simply a great way to purchase insurance against potential rate increases in the coming months.  It also provides peace of mind while the home is being built that the loan terms will not increase while maintaining possibility of them decreasing.

Would you like more information about extended locks?  Give me a call and I’d be happy to provide more details.