Collin County Real Estate Info.
� Mar. 31, 2008 - 10 Critical Mortgage Questions (#4 & #5)
4. When can I lock the interest rate and what will it cost me to do so?
Since interest rates are always in flux, the interest rate on your loan will likely fluctuate between the time you apply for a loan and closing. To prevent it from going up, you may want to lock the rate, and even points, for a specified period. Ask your lender for more details like how long you can lock for and if lock fees apply. Also, find out what the experts are expecting rates to do, check out a Rate Trend Index.
5. Is there a prepayment penalty on this loan?
There may be a prepayment penalty on your loan, meaning you cannot pay-off the mortgage without paying a penalty. This is important as it can hamper your attempt at the sale or refinance of your home. Some penalties are 1 percent of the loan amount, others are equal to six months' interest, some apply only when you refinance or reduce the principal balance by more than 20 percent, and some kick in if you sell your home. Find out the duration of any penalty period and how the penalty is calculated. Some lenders offer lower interest rates to buyers who accept prepayment penalties... just be sure you think through the positive and negative consequences before signing for a loan with a prepayment penalty.
Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com
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