After the Brexit vote, mortgage rates dipped to near-historic lows. But within weeks, some rates were climbing again. There are benefits and drawbacks to locking in a mortgage rate.
A rate lock could protect you if mortgage rates rise before you close on your home. But if rates go down, locking in your interest rate could be a waste of time and money especially if your lender charged you for locking in your interest rate. Here are some of the most common:. The first step to changing mortgage lenders is to find a lender that better suits your needs. Once you have gone over all of the rates, terms, payments, fees, and other information, you need to decide what you believe is reasonable.
Then, you can start looking for other companies that fit your criteria. You will also need to get copies of your credit reports and FICO scores. These will help new lenders determine your credit and how much they are willing to lend and on what terms. During the process, you will want to talk to banks, credit unions, and other financial institutions to determine which lenders or institutions can do the best work for you and your specific situation.
Once you have chosen your preferred lender, you will want to provide them with W-2 forms, pay stubs, income tax return documents, a copy of the mortgage loan from the previous lender, and a few other documents that will help with the process of obtaining a mortgage application. Once the application has gone through the underwriting process, you will want to review the loan offer. You will want to ask your lender to review the loan as well. You should only close on the loan after you have reviewed all of the mortgage terms and are happy with them.
Whatever your reasons for changing your mortgage lender, the most important thing is that you are as happy with your loan as you are with your new house.
Reviewed by JeFreda R. Article Reviewed August 21, JeFreda R. Brown is a financial consultant, Certified Financial Education Instructor, and researcher who has assisted thousands of clients over a more than two-decade career. Learn about our Financial Review Board. Key Takeaways You have the right to change lenders anytime in the process before you close on your loan.
Before you switch, you should consider the potential costs and delays involved in starting from scratch with a different lender. If you're unhappy with your current lender's service or rates, then it may be worth it to switch and ensure a better long-term relationship. Your Privacy Rights. To change or withdraw your consent choices for TheBalance. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data.
We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. If you have a rate lock, then your interest rate and points should not change, as long as your loan closes within the lock period. Rate locks mean that your interest rate will remain constant during the lock period—30, 45, or 60 days or longer. Your closing costs could change.
If you choose to get a different type of loan or if you change your down payment amount, your closing costs could change.
Also, if the home appraisal comes in higher or lower than expected. Finally, your behavior or income could be a factor:. Your lender does not control all closing costs. Expenses can change due to circumstances outside of his or her control. These include:. If you choose an adjustable-rate mortgage ARM , your loan amount will change according to the terms of the mortgage. The numbers refer to periods when the mortgage rate will change.
Your property taxes and homeowners insurance premium might change periodically. Your escrow account, which your mortgage company sets up, typically pays these types of items.
In the end, many initial fee estimates will change at closing. Refinancing A Home.
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