A borrower requests a rate lock on a construction-to-permanent loan where the construction phase is 8 months and the permanent phase begins immediately after. The lender's rate lock policy allows maximum 120-day locks. How should the MLO handle this situation?
Correct Answer
B) Lock the rate for the permanent financing portion with the lock beginning when construction is completed
For construction-to-permanent loans, the rate lock typically applies to the permanent financing portion and begins when the construction phase is completed and the loan converts to permanent financing. This allows the borrower to secure the permanent rate while staying within the lender's maximum lock period constraints.
Why This Is the Correct Answer
For construction-to-permanent loans, the rate lock typically applies to the permanent financing portion and begins when the construction phase is completed and the loan converts to permanent financing. This allows the borrower to secure the permanent rate while staying within the lender's maximum lock period constraints.
More Origination Questions
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