You may have heard the term rate lock before. Rate locks can save you thousands of dollars over the time you hold the mortgage loan, but what exactly are they and how do they work?

Mortgage interest rates are constantly moving up and down throughout the day and daily. During the underwriting and process stages of a mortgage, rates can fluctuate. Getting a mortgage rate lock is a way to keep your interest rate from moving higher before closing day.

What is a mortgage rate lock?

A rate lock, also known as rate protection, keeps your interest rate from rising between the time you apply for a mortgage and the time you close on your new loan.

A mortgage lender will set aside the necessary funds and “lock” loan terms and interest rates. In essence, think of a lock as your “RSVP”; the mortgage lender sets aside necessary funds for your transaction, and they will assume the risk of rates rising during the lock period.

Locking a rate allows clients to get the best mortgage rate possible while going through the refinancing or purchasing process. For example, if Greenway Mortgage locks in your rate at 3.5 percent for 45 days and rates jump to 4.5 percent within that period, you’ll get your loan at a lesser rate.

How long does the rate lock last?

The moment a loan is locked, the clock starts ticking! Lock periods typically last from 30 to 60 days, though in markets where the loan approval process is slow, the lock period can last as long as 90 days. The shorter the period that the lender locks a rate, the more beneficial to you in terms of the overall cost.

How does the length of a rate lock affect your cost?

In mortgage lending, almost every cost factor comes down to one variable—risk. You will generally find that the more risk a client is willing to assume, the better rates and terms a lender is willing to offer. Conversely, when a lender assumes more risk, they tend to counter that risk with higher costs. In this case, the longer a lender guarantees an interest rate, the larger a buffer they will require to offset that risk.

How much does a rate lock cost?

It depends as every mortgage lender is different. It also comes down to the amount and term of the loan. Some lenders do charge for a rate lock, though others offer one for free. But not everything is free. The fee may be included in the rate you were offered. Speak with your lender for more information.

Is a mortgage rate lock worth it?

The benefits of a rate lock outweigh the risk. If you want to protect your homebuying power, it may be worth it. The rate lock is about preventing your mortgage payment from going up due to possible rate hikes before closing. Not locking a rate can mean having to come up with a higher down payment if rates did go up. Given where mortgage rates are at today and the possibility of them going higher, getting a rate lock can pay off!

What happens if you commit to locking a loan and you do not close in that period?

Sometimes, conditions arise that delay the process, and loan locks "expire" before a lender can close the transaction. In this case, the lender will typically grant an extension on the lock period but at an additional cost. An expiring loan lock does not typically jeopardize the overall likelihood of the loan's closing.

Bottom Line

If you have a good mortgage rate, lock it. Mortgage rate locks may protect you from rising rates and give you peace of mind. Speak with Greenway Mortgage for more information. The security of protecting yourself from rate spikes is worth it.

When it comes to homebuying, knowing what you can afford should always be step number one. In today’s housing market, a real estate agent or seller is going to want to know if you’ve been pre-approved by a mortgage lender.

But what does pre-approval really mean, and why is it so important?

With rising home prices and high buyer competition, a pre-approval letter is crucial prior to making an offer. This year especially, being intentional and competitive are musts when it comes to buying a home.

Benefits of a Pre-Approval Letter

• A pre-approval letter is the only way to know your true price range and how much money you’re able to borrow for your loan.
• It shows that you’re a qualified buyer, which gives you a huge advantage in an ultra-competitive market.
• You may be able to negotiate a better deal as the pre-approval removes a lot of uncertainty for the seller.
• Winning an offer on a property that has multiple bids as the pre-approval makes you a stronger buyer.
• Confidence and peace of mind.

2022’s Competitive Housing Market is Real – Be Prepared

If you’ve been house hunting you know that there is limited housing inventory which means there are more buyers active in the market than there are sellers. In turn, this creates some serious competition. If you’ve been searching for your dream home, we know it’s frustrating, but don’t give up!

According to the National Association of Realtors (NAR), homes today are receiving an average of 3.8 offers for sellers to consider. As a result, bidding wars are still common. Pre-approval gives you an advantage if you get into a multiple-offer scenario, and these days, it’s likely you will. When a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war.

Freddie Mac explains:

“By having a pre-approval letter from your lender, you’re telling the seller that you’re a serious buyer, and you’ve been pre-approved for a mortgage by your lender for a specific dollar amount. In a true bidding war, your offer will likely get dropped if you don’t already have one.”

How Can You Gain an Advantage As a Home Buyer In Today’s Hot Housing Market?

Greenway Mortgage has expedited the approval process with its truly digital experience. With an easy online application and third-party verifications, Greenway Mortgage has significantly reduced the time and paperwork for the approval process.

So, remember what we said before? Pre-approval should be step number one when it comes to the home buying process. Before you head out to search for your dream home, click here to fill out our online pre-approval application!

In a competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. Not only does being pre-approved bring clarity to your homebuying budget, but it shows sellers how serious you are about purchasing a home.

Our licensed mortgage experts are available 7 days a week to answer all your questions.

Greenway Mortgage has done it again, but better! We’re ending 2021 on a high note as we have raised over $30K in donations for the Halfway Home Animal Rescue Team.

With the help from all of you and Greenway's generous match, we raised over $30K for the Halfway Home Animal Rescue Team in just three days.

A BIG Thank You to All from Greenway Mortgage

Greenway Mortgage wants to thank everyone who donated and those that shared our fundraiser with friends and family!

A huge shout out and thank you to Caroline Manzo from the Real Housewives of New Jersey for supporting this cause and for helping us spread the word about our Giving Back Fundraiser on your social media platforms. You are a powerhouse of positivity, and we love it.

Everyone’s donations help in unspeakable ways and is greatly appreciated by Greenway Mortgage and the Halfway Home Animal Rescue Team. We hope that you will take great pride in the important difference that your gift makes for all the animals in need. We truly couldn't have done this without you!

A message from The Halfway Home Animal Rescue Team:

“Thank you from the bottom of our “Hharts” We are once again blown away by the generosity, the love, and the support of our team, our community, our friends, families, and your friends and families.

This shows us that you are watching what we’re accomplishing together for the animals, and that you’re fighting for them right alongside of us. It shows us that you care, but even more than that, it shows our animal friends that we ALL care.

We promise to never stop rescuing, and to continue to step up instead of giving up, even when the going gets hard.

To James and everyone at Greenway…your generosity, your compassion, and your friendship means the world to us. We can’t wait to show you what we’ve done…and what we have planned. Thank you, Thank You, Thank You everyone. We are truly blessed.”

About Halfway Home Animal Rescue Team (HHART):

"Halfway Home Animal Rescue Team (HHART) is a group of passionate animal advocates with many years of experience in rescue, animal care and welfare. Our years of working with shelter animals, and the challenges that they face daily, have inspired us to explore ways to do more for the individual and best interests of those animals most in need.

As we begin our journey, we will place our rescued dogs and cats into loving foster homes. We will focus on helping responsible families keep their pets, preventing animal hunger and suffering, and providing support wherever possible.

We are here to help. We look forward to assisting with any animal rescue, and to collaborating with other like-minded organizations to save as many animal friends as we can. Rescue is not a business...animals are individuals...not numbers. They are all special in their own way, and each deserves the chance to show us who they truly are. It is up to us to provide them with that chance."

Giving Back & Getting Involved – How Can You Help?

Giving back is very near and dear to our hearts here at Greenway Mortgage. If you would like to give back, consider making a donation to help all the animals in need. Your gift helps them provide lifesaving and life-changing medical care, then rehabilitate, and find the forever home these animals deserve. Please give what you can. No gift is too small!

Resources:

• You can learn more about Halfway Home Animal Rescue Team here.
• Make a Direct Donation today by clicking here. 
• Follow them on Facebook and Instagram.

Since the pandemic, the meaning of home has certainly changed for many Americans.

For renters, the feelings of security and stability have become more important. The financial benefits that come with rising home equity when owning your own home have become clearer.  

Many homeowners have decided that their home no longer meets some of their needs as finding spaces for a home office or a home gym has become an obstacle. The need for a home with more space inside and out is now significant as our homes have been operating 24/7.

There are still two main obstacles some homebuyers face when it comes to buying a new home and which include: the ability to save for a down payment and the ability to qualify for a mortgage at the current lending standards. However, there’s good news for borrowers in 2022 as the FHFA announced that they will be raising its conforming loan limits for prospective purchasers in 2022.

THE FHFA Increases its Conforming Loan Limits for 2022

The FHFA has significantly increased its Conforming Loan Limits for 2022. Sandra L. Thompson, FHFA Acting Director, explains in the press release that:

“Compared to previous years, the 2022 Conforming Loan Limits represent a significant increase due to the historic house price appreciation over the last year. While 95 percent of U.S. countie​s will be subject to the new baseline limit of $647,200, approximately 100 counties will have conforming loan limits approaching $1 million.”

What does this mean for borrowers?

This is great news for buyers and owners alike:

1. Buyers may be able to borrow more money through a conventional, typically lower-rate loan.

2. Owners may be able to refinance their "jumbo" loan to a lower rate conforming loan and possibly drop mortgage insurance, too.

3. Combining (or avoiding) smaller 1st and 2nd mortgages may now be an option.

4. The increase reaffirms the health of the housing market and your decision to invest in a home.

For all the specifics about the FHFA Conforming Loan Limit increase, click here.

The FHA also Increases Loan Limits for 2022

The increases will allow more borrowers to take advantage of FHA’s benefits:

1. Low down payment options

2. Lower total cash-to-close requirements with gift or seller contributions

3. More lenient and streamlined refinancing

4. Ability to combine purchase and rehab financing

5. In some high-cost areas, higher loan limits than conventional mortgages

For more specifics on FHA’s Loan Increase for 2022, click here.

Bottom Line:

Buying a home in 2022 has just become easier for you! Reach out to the experts at Greenway Mortgage to learn about your home buying options.

Are you getting gift money to use for the down payment of your new home? If so, here are a few things you must know before funds start changing hands.

The Donor:

The donor of the gift must be a family member, fiancé or domestic partner. They must prove  the ability to provide the gift. This proof can be a copy of their bank statement, a copy of the canceled gift check or a signed letter from their bank evidencing the availability of funds. The underwriter’s discretion is always at play here, so more than one of these items may be required.

The Gift Letter:

We will provide a form for the donor to complete and sign. It will include items such as the donor’s name, address and relationship to you; the donor's account information; the property being purchased; the dollar amount of the gift; and the date or approximate date of transfer, along with a statement that the funds are a gift with no expectation of repayment.

The Transfer:

Documenting the transfer is vitally important. The donor should give the gift in the form of a check or wire. If by check, make a copy then deposit it in the account that is already being used for verification of funds to close. DO NOT combine this deposit with any other incidental deposits. You should provide a copy of the deposit slip or confirmation and either an online update or the next account statement to evidence that the deposit cleared into the account.

Mortgage Programs You can Use Gift Money With: 

Some programs allow for the entire down payment to be in the form of a gift. Others may require that you have at least 5% of the purchase price from your own funds unless the total down is 20% or more. As these rules can vary or change at any time, never hesitate to consult with us for the specifics as they relate to your transaction.

Click here to learn about the different loan programs that allow borrowers to use gift funds towards their down payment. 

While documentation requirements may seem excessive at times, please remember that underwriters are simply following the rules to assure that your down payment is not borrowed and that any allowable gift funds are coming from acceptable sources.

Questions? Reach out to our team today! We are happy to help.

Helpful Resources:

• Greenway's FHA Down Payment Assistance Program

• How Much Do You Know About Down Payments? 

• Is Buying a Home with Little or No Down Payment Right For You

• First-Time Home Buyer Resources