If the purchase contract falls through after you lock your rate, your rate lock may expire before you find a new property. Some lenders allow you to transfer your rate lock to a new property, but policies vary widely.
Here is what happens to your rate lock when a contract falls through and what options you have.
Can You Transfer Your Rate Lock?
Some lenders offer rate lock transferability, meaning you can apply your locked rate to a new property if the original deal falls through. This is not guaranteed and policies vary by lender. Some allow one transfer, while others do not allow any.
Ask your lender about lock transferability before you lock, especially if there is any uncertainty about the property. Knowing the policy in advance helps you plan your next steps.
What If the Lock Expires?
If the contract falls through and you cannot transfer the lock, the lock will eventually expire. At that point, you would need to lock a new rate when you find another property. If rates have risen since your original lock, your new rate will be higher.
To protect yourself, look for a lender who offers lock transferability or a longer lock period that gives you time to find a replacement property.
Steps to Take
- Contact your lender immediately when the contract falls through.
- Ask about transferring the lock to a new property.
- Start searching for a new property quickly to minimize the gap.
- If the lock expires, ask about current rates and lock a new one when ready.
Bottom Line
If your contract falls through, your lock may expire or be transferable. Ask your lender about transfer options before locking and act quickly if you need a new property.
