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Loan Modification


Extended Rate Lock Options 

Construction and Renovation Loans, frequently require extended lock terms and options.  With any construction or renovation loan, you have the ability to select your final loan program and lock your interest rate at any time between loan approval and final modification. In years past, many clients elected to allow their final interest rate to "float" with the market as we were in a generally declining rate environment. However, given the volatility of both the stock and bond markets, my suggestion o most of my current clients is to lock your rate and program when you feel comfortable with the rate available to you. The only caveat is that your loan must be locked 10 days before modification. I want you to understand that you are in complete control of the process and that you will get written confirmation of the rate lock and the length of the lock. To better meet the needs of clients, lenders have developed two different lock programs.

Extended Hard Lock

We normally offer free lock terms on all products to 60 days without charge. The extended hard lock costs are available in the table below. Please understand that any "hard lock" does not permit a "float down feature in rates have improved between your lock and modification. 

Extended Hard Lock              60 Day              90 Day             120 Day            150 Day              180 Day
All products Deposit Fee NA NA .500% .750% 1.000%
except ARMs Add to Disc. NA .500% .875% 1.250% 1.625%

In other words, a 120 day lock would cost .875% of your loan amount, of which .500% would be due when you lock. Fees are due no later than 48 hours after rate lock.

Extended Hard Lock  Fees are non-creditable and non-refundable except in the case of an underwriting rejection.

Smart Lock

A good choice for some market conditions, the Smart Lock allows a free float down if the market improves. Essentially you are protected against significant increases in rate and if  interest rates improve you get the lower rate. You may convert to a hard lock at any time but you will be subject to the fees above if your hard lock is longer than 60 days.

Smart Lock with Float Down for all products except FHA/VA and ARMs

                                           60 Day      90 Day                   120 Day                 150 Day                 180 Day
Fee Waived .500% .750% .875% 1.000%
Rate Cap .250% .500% .625% .750% .875%

Smart Lock Fees creditable at modification and refundable only in the case of an underwriting rejection.

Start Lock with Float Down for FHA/VA loans

                                60 Day                 90 Day                   120 Day                150 Day                  180 Day
Deposit Waived .500% .750% .875% 1.000%
Add to Discount .500% .625% .750% ..875% 1.000%

Smart Lock Fees creditable at modification and refundable only in the case of an underwriting rejection.

Let me try to make some sense of the charts.

Hard Lock

If you decide on a hard lock for 120 days you are charged .500% of your loan amount at the time you lock and we lock your rate at the current 60 day price and charge you the remainder of the .875% points (of the loan amount) at closing. I will show the points as discount points so they are considered prepaid interest and as such are deductible from your taxes this year.

Smart Lock

Same scenario on a 180 day with a conventional loan. If the current rate without points is 8.000%, we will fix your maximum rate at 9.000% and your cost to do so is .875%. If rates improve before modification, you will "float down" to the then current 60 day price. You may buy your rate down further if you wish.

NEW! II have written a series of newsletters covering construction/perm financing loans which are available free.

One of the questions I frequently get from my clients is about finding a qualified and reliable contractor. After a great deal of research, I do recommend Reliable Remodeler. I have personally used their free service and was very pleased with the outcome. Please complete their contractor referral form for up to 4 local pre screened contractors.

As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your consumer and mortgage debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.


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