It seems like NVR has not been clear with some people on their options for
locking in their rate. I'm not surprised, because they didn't tell us about it
until we pushed them for an option to lock in early if we wanted (and even then
they "strongly suggested" that we wait until a month before our settlement date
to lock in... but I like to make my own decisions, so I didn't listen to them
:)). Even after they explained the process for locking in early, I was still
confused. It wasn't until I actually started asking our Loan Officer for rates
that I understood how it works, so I figured I'd write a post to try to clear
things up for those of you who haven't locked yet.
You can lock as much as 150 days out, there's just a difference in the rates
and/or points you have to pay to get those rates, but they give you options.
When asking for your rates, just ask your loan officer for 60 and 90 day lock
rates to see the difference. I emailed my Loan Officer once every few weeks to
get rate quotes in the beginning. Then when rates really started to drop, I
emailed her every day. We decided early on that if we could get 3.75% for no
points, we would lock. (I'm the kind of person that needs to make a plan and
stick to it, or I drive myself crazy trying to make a decision).
Here's an example of what the difference was for us between a 90-day lock
and a 60-day lock on the day we locked in. By the way this is exactly what my
LO would send me when I emailed her for the rates. Luckily my LO was awesome
and always got back to us within a few hours.
90 day (expires 10/24)
3.25% - 1.25% discount pts
3.375% - .375 disc pt
3.5% - lender credit of .5%
3.625% - lender credit of 1.125%
3.75% - lender credit of 1.5%
3.875% - lender credit of 2%
60 day (expires 9/24)
3.25% - .875 discount pt
3.375% - 0 disc pts and no
credit
3.5% - lender credit of .875%
3.625% - lender credit of 1.5%
3.75% - lender credit of 1.875%
3.875% - lender credit of
2.375%
For example, if your loan amount (house
price minus down-payment) was $100,000 and you chose the 3.375% 90-day lock, you
would have to pay $375 (0.375 pts) at closing to receive this rate. If you did the 3.375%
60-day lock, you would get that rate at no cost. The lender credit just means
they give you that money at closing.
We would up doing the 3.625% 90-day lock
so we will be getting about $3,000 credit at closing. We chose that so we would
have some extra cash available after closing. We were between 3.625% and 3.5%, and even though we are less than 60 days from our estimated closing date, we
chose to do the 90-day lock to be safe just in case something happened that
pushed back our settlement date (there's my worrying coming into play again).
The difference between those two rates over the life of our loan was about
$7,500 (difference of $20 in our monthly payment). So basically we are
"financing" that $4,500 ($7,500-$3,000=$4,500) in order to have that $3,000 lender
credit right now. Our thinking is that we need the money more now that we will
in 7 years, which is the break even point between those two rate options.
Normally I am against unnecessary financing of any kind, but this just seemed to
make sense for us. (Hopefully this post is making sense too... the more I write
the more confusing it sounds!).
Keep in mind that if you don't go to settlement
before your lock expiration date, you automatically get the higher of either the
rate on the day of your settlement or the rate at which you originally locked.
I hope this helped some of you who are still in the early stages! Happy
rate-watching!
