What Happens If My Interest Rate Lock Expries Before I Close On The House I Am Buying?

My article is also on Yahoo. Melanie Dee.

I am in the process of buying my first home. How ironic for me, I am a real estate agent who does this sort of stuff for a living. I can sling houses out in 30 days so long as my client has a standard Conventional Loan.
However due to a mold issue that my bank wanted fixed, time suddenly became my enemy. My interest rate lock and mortgage commitment expiration date was 30 days away, and the bank was not rushing anything, even though I was.

The mold issues were fixed in nearly an instant, however my bank was literally kicking stones when it came to getting their end of things finished up. I watched as my mortgage commitment letter expired, only to have to re-submit paperwork in order to get a new mortgage commitment letter.

After that expired though, the most important thing was about to expire, my interest rate lock, and this worried me. I felt as if the bank was moving slow on purpose just to slap me with a higher interest rate, and with rates hiking upward, I was really under pressure and angry.

But enough about me, you are here because you are wondering exactly what happens if your interest rate lock expires before you close on your loan.

Well many things can happen, however if it is due to the bank itself, and something out of your control you can fight them on it. For me, I had grounds to fight because the moment the bank required that the mold be tested, I hired a company to get it done in 24 hours.

The bank literally took 2 weeks doing nothing to determine if the test was OK.

In the very beginning they also wasted 2 weeks doing nothing, when finally they decided to ask for my income verification. That added up was literally a month long where they could have been working and asking me for the proper papers to be signed way ahead of time, and instead they kicked stones and didn't. They waited till the very end, and therefore I had grounds to stand on.

If you were the cause of the rate expiring, you may not have much ground to stand on, and you may have to pay a hefty fee to extend your lock by 7-15 days.

Now some lenders will issue you a free extension, but trust me when I say- before you take on any loan with a lender find out in advance what their policy is on interest rate lock expiration.

All in all, so long as it in not your fault that the loan did not close in time, and it was indeed the lenders fault, argue till the grave. Odds are they will allow an extension because they do not want to lose you as a client.
In order to avoid this mess though, always ask prior what the interest rate expiration policy is. If you do not like what you hear, find another lender. There are plenty of them out there willing to work with you.