Your Questions Answered - Long Lock Loan: What Are They and How do They Work?
It's Sunmark's "Welcome Home Week". Are you looking for a new home? We're ready to help you make it happen. Recently, Sunmark added more mortgage products to our line-up to help you do more with your money. All week, our Sunmark experts will provide the answers to your top questions about these new offerings.
Long Lock Loan Options :: What Are They and How do They Work?
Michael Rourke, AVP of Mortgage Operations, Answers the Most Frequently Asked Questions
What is a “Long Lock” loan option?
A “long lock,” frequently referred to as an “end loan,” is a loan program designed for buyers who are purchasing a home being newly constructed by a builder (usually in a development or community). With a Long Lock Loan, their interest rate is locked in for 270 days, rather than our standard 60-day lock, and allows for a one-time “float down” if rates improve before closing. A small fee is required if that option is exercised, but is typically well worth it with the interest savings.
Who is the ideal candidate for a Long Lock option?
The Long Lock option is a great choice for anyone who is thinking about buying a home that is being newly constructed and financed by the builder. This product differs from our Construction Draw Loan in that the builder carries the cost of the home building process until the home is completed.
What requirements need to be met to be eligible for a Long Lock option?
The criteria for the Long Lock option are similar to shorter lock loans on existing homes and requires a strong credit history. We also collect a small lock-in deposit of $1,000 that is fully credited back to you at closing.
If I didn’t meet the requirements, are there other options I could consider?
We would evaluate your unique situation to offer the best solution for you. We also allow borrowers to float their interest rate until they are within 60 to 90 days of the completion of the home.
What are the pros and cons of a Long Lock option?
The biggest pro is that the borrower is protected from any increase in their interest due to fluctuations in the market. The only possible downside is if there is a delay to the completion of the home; additional costs may be incurred to continue to be protected by a locked interest rate.
How does the loan work/what happens once approved?
The process is very similar to a standard conventional loan: an approval is issued, and then we wait for the home to be completed. A final inspection (performed by the appraiser) is ordered, and any necessary updates to documentation (paystubs, credit union statements, etc.) are collected before the closing date is scheduled.
What sets this product apart from other options?
It is the longest period interest rate lock protection that Sunmark Credit Union offers, and is the only option that comes with a “float down” feature.
Michael Rourke has over 22 years of experience in the mortgage industry, with 21 of those years spent in various roles at credit unions. Michael joined Sunmark Credit Union as the AVP of Mortgage Operations April 2021 and is responsible for the mortgage operations team which consists of secondary market, closing, funding and delivery.