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Why you should WAIT to lock in your rate

Updated: Nov 10



As a home buyer applying for a mortgage, you will soon, if not already, start feeling the pressure to “lock in your interest rate.” Because the interest rates can change from day to day

(one more stressor in the already stressful home buying process), there is great relief knowing

that you might be able to lock in your interest rate. A mortgage rate lock freezes your interest

rate until loan closing.


But, as a real estate attorney in New York, where closings can be delayed for way too many

reasons, I must warn you, DO NOT LOCK IN YOUR MORTGAGE INTEREST RATE

WITHOUT CONSULTING WITH YOUR ATTORNEY!


Let me give you a quick breakdown of all the steps that need to be taken before a closing can

be scheduled:

1. Contract has to be signed by buyer and seller

2. Lender has to review the contract and all the buyer’s financial documents before it can approve the loan

3. We will order a title search from a Title Company but this can take anywhere from 3-6 weeks, depending on how fast the various municipalities are able to provide the report documents for their city/town. If any violations or issues arise, we have to make sure they are resolved.

4. In many cases, a survey has to be ordered.

5. If Buyer is applying for a condo or coop, buyer has to be approved by the Board of Directors and paperwork has to be provided by the Management Company.

6. If the property is supposed to be delivered vacant, and free of tenants, we have to make sure all the tenants are gone.


Until all these steps are taken, a closing cannot be scheduled. Because a mortgage rate lock usually comes with an EXPIRATION DATE and if you don’t close by the expiration date, you pay a Steep penalty, we always advise our clients not to lock in their rate until they consult with us. When they consult with us, we can review the file to see how close we are to closing and advise if it is safe to lock the rate. When clients lock their rate without consulting with us (which unfortunately happens) they might wind up paying a steep penalty or causing everyone to stress and scramble to try and close in time to avoid the penalty.