Cancel rate lock? Some lenders allow cancellation, but you may lose your deposit or any fees paid for the lock. Always review your lock agreement terms carefully before requesting cancellation.
Rate Lock Cancellation
Canceling a rate lock is not always straightforward. Most lenders consider a rate lock a binding commitment. If you cancel, the lender may retain any fees you paid for the lock including discount points or lock extension fees. Some lenders will cancel with no penalty if you have a valid reason such as the deal falling through due to circumstances outside your control.
If you want to switch lenders, the new lender will have to establish a new rate lock based on current market rates. Your old lock cannot be transferred to another lender, and you will likely forfeit any fees paid to the original lender.
What Happens to Your Deposit?
If you cancel the loan application entirely, the lender's cancellation policy determines whether you receive a refund of application or processing fees. The rate lock fee if separate is typically nonrefundable. Your earnest money deposit with the seller is handled separately and is governed by your purchase contract.
Check Your Lock Agreement Terms
Your rate lock agreement should spell out the cancellation terms. Look for language about refundability, cancellation windows, and any conditions that would allow a full refund. If the language is unclear, ask your loan officer to explain your rights before signing.
