If a rate lock expires before closing and rates have increased, what typically happens?
Correct Answer
C) The borrower may need to accept the current higher rate or pay for a lock extension
When rate locks expire, borrowers typically face current market rates, which may be higher. They may have options to extend the original lock (usually for a fee) or accept current rates. Lenders are not legally required to honor expired locks.
Why This Is the Correct Answer
When rate locks expire, borrowers typically face current market rates, which may be higher. They may have options to extend the original lock (usually for a fee) or accept current rates. Lenders are not legally required to honor expired locks.
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Previous Question
A borrower locked a rate 45 days ago for a 60-day period. Due to title issues, closing will be delayed by 10 days beyond the lock expiration. The borrower wants to extend the lock. What factor is LEAST likely to affect the extension decision?
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