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When Should I lock?


Interest rates are impacted every day by forces in national and global economies. The economic indicators that are key to the mortgage markets are those that will impact the cost of mone; most notably inflation. If any economic data indicates that the prices for services or goods, at a retail or wholesale level, could potentially increase faster than expected, prices for mortgage and bond securities will fall, driving interest rates up.

This would be most commonly referred to as the economy "heating up" .Economic news of a slowing economy, such as softening prices or rising unemployment, will usually result in higher prices for mortgage or bond securities and subsequently lower interest rates. The driving force behind it all is the federal reserve, which sets the monetary policy in the United States in an effort to maintain a healthy and robust yet stable and noninflationary economy. By raising and lowering the cost of money (the federal discount and federal funds rates), this institution is able to impact the full spectrum of the financial markets. Because of the unpredictability of these economic factors and the subsequent volatility of interest rates, it is important to know what a lock is and how your lender’s lock policy works. A lock is a lender’s guarantee that the rate you have selected is protected against rate fluctuations in the marketplace. Different lenders have different rate lock policies and some are trickier than others. So it is important to know how your lender’s lock policy works. There are three basic factors that you should consider in deciding when to lock in your interest rate.

How long is your escrow period?

Locks are available for varying lengths of time. Xcapital Inc currently offers 40, 60 and 90 day lock periods. As the lock period increases, so will the cost of the loan, either an increase in the rate or the fees, or both. Taking a longer lock may cost a little more but will protect you from potentially large increases in rates during that time period.

What are the current market trends?

By taking a look at bond market activity and current economic news, you can get a general idea of how interest rates will be impacted. In a rising market, it is best to lock a rate as early in the lending transaction as possible. If interest rates are in a downward trend, you may want to watch the market and lock when you feel the rate is acceptable. But keep in mind that interest rates generally move up faster than they move down; there is a risk in waiting for the "perfect" rate that may never come around. The bottom line is, when a good interest rate is available, it is best to secure it.

Get it in writing

Once you have decided to lock your rate, make sure you obtain a written lock-in agreement. Read your lock-in agreement carefully, and understand your lender’s terms to avoid confusion and disappointment. Read our Rate Lock Policy below.

Understanding the lock-in process and your lender’s policies, and especially having your lock-in agreement in writing, will bring peace of mind and will contribute to a positive lending experience.

What is a rate lock?
A rate lock is a lender’s guarantee that the rate you have selected is protected against rate fluctuations in the marketplace for a specified period of time. Xcapital Inc locks in your interest rate but also your closing fees. This lock period will have an expiration date based on the lock term that you select.

When can I lock?
After obtaining approval by speaking with one of our Loan Consultants you can immediately lock in your interest rate based on your close of escrow date.

Will there be a charge or additional fees to lock in my interest rate?
Xcapital Inc will require a credit card number for a $500 lock in fee to lock in your interest rate. The lock-in fee will be charge only if you back out of the loan. The lock-in fee is NONREFUNDABLE unless, based on income qualifying or credit, we do not approve your loan for closing. If your loan fails to close for any other reason (including your decision to withdraw your application), then the lock-in fee will not be refunded to you. There is no application or appraisal fee.

What happens if the interest rate drops after I have locked in my rate?
Once you have locked in your interest rate with Xcapital Inc, your rate, points, and closing fees are not negotiable, even if market conditions improve. A rate lock is a commitment by the lender and borrower to close the loan at the interest rate agreed upon and locked in, during the specified lock period. Please see below for the policy regarding when the closing date exceeds the rate lock expiration date.

What happens if my rate lock does not meet the expiration date?
If your rate lock expires prior to your close date, you will have the option of re-locking your interest rate for the same lock period. However, the rate can only be re-locked at the original interest rate or our current market rate, whichever is higher.

Read What Our
Clients Say!

Xcapital enabled me to obtain verbal approval on the loan before I had to put up any of my own money for the appraisal. That showed me you were looking out for my interests first, which is a requirement for me before I'll do business with a brokerage company.

Thanks again,
Ray