Frequently asked Questions about Rates and Costs
How often do interest rates change?
Interest rates change regularly with the fluctuation of the market. The interest rates we quote you on the site are good for two hours. If a quote expires, you will be prompted to resubmit to receive an updated quote. Of course, once you lock or protect your rate, it will not increase as long as you close and fund your loan on or before the rate expiration date.
When should I start shopping for a mortgage and how do I know what I can afford?
The best time to look for a mortgage is before you look for a house. This way you'll know exactly the amount of money you can borrow. You can use the calculators on this site to help you determine these numbers as well as your estimated monthly payments. Get pre-approved for a mortgage before shopping for a home and you'll maximize your negotiating power. It's free and will take only a matter of minutes to get a decision, and there's no obligation until you want to reserve your funds.
Once I have selected a program, what are my rate options?
You will be presented with rate options that are applicable to your loan purpose, closing date and qualification. The possible options are listed below.
Rate protection gives you the opportunity to take advantage of a decreasing interest rate market with the confidence that if the market increases, you are protected. A cap is added to your interest rate. The capped rate is the maximum interest rate you will pay, even if rates increase, as long as you close and fund your loan by the lock expiration date.
By locking in your rate, you have committed to the rate and point combination that has been presented to you.
Once you lock your rate, the rate and point combination will not change�regardless of what happens with interest rates�as long as you close on or before the rate lock expiration date.
By opting to float, you have not selected or committed to any rate and point combination. Therefore, your ultimate rate is subject to both up and down market fluctuations until you decide to either rate-protect or lock your rate.
If you choose to float, you will have up until 5 days prior to closing to lock your rate. If you do not choose to lock, your rate will be locked for you at the current market rate 5 days prior to your closing.
When can I lock my rate?
If you have a contract on a property and are within 90 days of closing you can lock your rate. If you are refinancing, you can lock within 45 days of closing. If you have selected the rate protect option you can lock between 15 and 5 days of closing.
With all programs, you must lock your rate at least five days prior to closing.
What if interest rates go down after I lock my rate?
Once you lock the rate, it cannot be changed. For that reason, it's important to consider carefully the timing of your rate lock. If you follow the market or plan to watch it closely, be sure you're comfortable with the trends you see before you lock. You may want to consider our rate protection program to help safeguard against changes in interest rates.
What happens if my loan does not close before the rate lock expiration date?
When you lock your interest rate, you are guaranteed to receive that rate as long as you close and fund your loan by the specified expiration date. If your loan closes and funds after this date, you are no longer guaranteed your locked interest rate. Instead, you will receive the higher of the current market rate or your locked rate. Please note that you cannot receive a lower rate by allowing your lock to expire.
If I have selected rate protection and do not exercise my one-time float down option, what will happen?
If you have not exercised your one-time option to float down, your rate will automatically be locked at the market rate, five days prior to your closing date. If the rate has gone up and over your capped rate, you will receive the capped rate. If the rate is lower than the cap, you'll be locked in at the lowest rate available to you.
What are points?
Points are a percentage of the loan amount paid at closing that affect your interest rate. For instance, on a $90,000 loan, 1 point = 1% or $900. How it works is that if you pay points, you buy down the rate. Alternatively, in exchange for a higher rate, the lender pays points to offset your closing costs. These are considered negative points. Negative points may be a wise option if you have limited funds to use at closing. Points are also disclosed as discount points. Whatever the name, they are itemized on your Good Faith Estimate and are typically paid at closing.
Are discount points tax deductible?
In many cases they are. Contact your tax preparer or the IRS to obtain a qualified opinion and the best expert advice.