If you locked in your interest rate and cannot close in time, what happens?  You can extend the rate lock by paying a fee to the lender. Most banks are willing to extend your rate up to 60 days (for a fee).

 

The fees are approximately as follows:

 

Extension # days    cost*

 

1                            free           

7                            1/8 pt        

15                          1/4

30                          3/8

45                          1/2

60                          3/4

           

*Remember, a point is a fee based on loan amount.  So, a ½ point on a $100,000 loan is $500 bucks.

 

Here are a few tidbits:

 

·        Each bank has their own extension rules

·        Do not wait until the interest rate expires to extend it, do it before

·        Ask how much each period will cost you

·        Ask if you need another extension, can you get it (some banks only allow one time)

·        Get the extension in writing

 

 

RED ALERT: If you got a loan approval under a program that is no longer available (ie: stated income verification, low fico, high LTV, etc) most lenders will make you lock this loan in to keep the approval.  If you locked the loan and do not close in time, some banks will not allow you to extend the rate AND you will lose the loan program. Check it out with your lender!

 

 

Dale Siegel