Can I Lock My Mortgage Rate for an Extended Period of Time?

Q: Can I lock my mortgage rate for nine months?

A: The short answer to whether you can lock your mortgage rate for an extended period of time, in this case up to nine months, is "yes," but whether you want to lock a rate for that long is an open question.

Asking a lender to reserve a loan for you for up to a year isn't unheard of, especially in a construction-to-permanent financing arrangement, and your nine-month window certainly fits that time frame.

How much will a long rate lock cost me?

However, such a long lock period comes at a price.

In some instances, a lender will add a premium to current mortgage rates -- 0.125 percent to 0.5 percent is common -- to allow you to lock in this new interest rate. Others will allow you to lock at today's low rate, but you'll pay non-refundable, percentage-based fees in the form of "points." Each point is a fee of 1 percent of the (final) loan amount, and you could see a two or more point fee to get such a long rate lock.

Should I lock-in a rate for 9 months?

This is where the "open question" comes in on whether or not you want to lock a rate for that long. Long-term rate locks all depend upon what the lender may offer and what it will cost you either today, upfront or over the life of the loan.

It also depends upon how you feel about the direction for interest rates over your needed lock period. Should mortgage rates rise sharply, your outlay today may prove beneficial. However, if mortgage rates don't move much, you may have overpaid for protection you didn't need.

Paying points to lower your rate

One other item to consider is that if you don't lock the rate and rates do actually rise, you will always have the option of paying fees later to lower the rate. Unlike the long-lock fee, though, these would be paid to lower the interest rate on the loan (aka "discount points"). Each discount point paid will lower the final interest rate by 0.125 percent to 0.25 percent, so even if rates go up, you can buy it back down again (at least within reason).

Discuss these options with your mortgage lender. If your current lender does not offer a long lock-in period, do a little research and you should have little trouble finding a lender to take on you and your rate lock.

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