Interest Rate Lock Question

[Anonymous]

We locked in our interest rate at 5.25 and @1 point.  Our lock has now expired and the bank has told us that they won't open it back up to current rates and we have to pay 1 percent extension fee to keep the old interest rate.  So... pretty much we have to pay them more money just to keep the loan we have.

Is this common? To force us to keep the old rate and still have to pay more money to do it. 

[ShanetheMortgageMan]

If the rates when you re-lock are as good or better than when you originally locked, then the original lock terms (rate & points to get that rate) should remain the same.  Even if the interest rate is about to expire, and the rates are the same or better now, the rate should be able to be extended for no additional costs.  If the rate is worse now than when you locked in, and it expires, then you are subject to worst case scenario (between when you originally locked and the rates on the day you relock on)... if the rate hasn't expired and rates are worse than when you originally locked in, an extension can be done at a small cost (typically about .25% fee for 15 days extension).  If you want to know all of your options, ask your loan officer for a copy of their lock extension policies.

[Anonymous]

Ok we locked on August 28th at 5.25% with us paying 8/10th of a point.  The rate expires on Sep 28th (we will not by closing by then).  Rates are now lower - 5.25% with no points.   They will not give us a new rate and will only give us the old rate with an extension fee of 1 percent (8/10th of a point) for 15 days then another extension fee. 

I'm thinking we are about to get a new lender.  

Message Edited by jec0212 on 09-23-2009 11:37 AM

[ShanetheMortgageMan]

Let them know that you will be going elsewhere, I bet they'll "change" their policy for you.