Rate Lock Extensions and Confirmation

I have a rate lock on my refinance for 5.5%, but because we had issues with the fha appraisal that delayed us, we may lose our lock. The broker is now stating she can extend the lock without costing us interest. Is that even possible, or is she just buying time?

1 Answer

It's hard to say whether your broker is giving you the run around or not. However, I can tell you this: Wholesale lenders have different policies regarding rate lock extensions. If interest rates are the same as or better than they were when the loan was locked, some of them will extend the lock for a short time for free or for a very nominal cost. Sometimes, even if the extension fee is not exactly nominal, a broker will pay for the lock extension out of the yield spread premium paid to them by the wholesale lender as an act of good will.

If I were in your shoes, I would ask your broker for a copy of the lock confirmation from the wholesale lender. That document will show the amount of yield spread premium paid to the broker and the rate at which the loan was locked. That number you will see -- and you will see it labeled as "price," or "yield" represents the percentage of the loan amount paid to the broker as a commission. You should compare that to the Good Faith Estimate to see if there are any discrepancies. You should also ask the broker to provide you with a copy of the wholesale lender's lock extension policy. With that information in hand, you should be able to have an informed conversation with your broker and be in a better position to evaluate whether you are getting the run around.