April 16, 2024
There is plenty of bad information about home loans out there. Many persistent myths color a house hunter’s opinion of certain mortgage options including FHA loans.
What kind of misinformation is there in this area? It includes the wrong notion that FHA loans have need-based guidelines, such as an income cap, or that they are only for first-time home buyers. Both of those are untrue.
Did Fox Business News Get It Wrong About Mortgages?
In April 2024, the Fox Business News article, Today’s 15- and 30-year mortgage rates rise ran some information about the home loan process including a section discussing rate locks. The article includes the following, quoted verbatim:
“A mortgage rate lock lets you lock in the current mortgage rate for a certain amount of time — often between 30 and 90 days. During this time, you can continue shopping around for a home without worrying about the rate changing.”
Some want to know if consumers should apply for a mortgage rate lock while they are still uncommitted to making an offer to a specific seller. And some reputable agencies weigh in on that below.
What Investopedia Says
Investopedia reports on mortgage rate lock commitments, saying, “Mortgage locks generally last for 30 to 60 days. At a minimum, they should cover the period necessary for the lender to process your loan application.”
Investopedia says the mortgage application’s timing is tied to your willingness to purchase. “Once you are under contract to buy a specific property, your lender will initiate the mortgage application.“
What CFPB Advises About Mortgage Rate Locks
The Consumer Financial Protection Bureau (CFPB) is a government agency that publishes information for the general public about consumer finance issues. Here’s what the CFPB has to say about the timing of a rate lock, whether for FHA mortgages or any other type of home loan.
“A lock-in or rate lock on a mortgage loan means that your interest rate won’t change between the offer and closing, as long as you close within the specified time frame and there are no changes to your application.”
Furthermore, the CFPB says a home loan mortgage interest rate lock is intended for a specific part of the home buying process. When? Typically between the time you have made a purchase offer and closing day.
This seems to indicate that house hunters aren’t meant to ask a lender for a mortgage rate lock while still deciding on the right house to buy with their home loan.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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