Secure a Great Interest Rate with First Federal!

When it comes to locking in an interest rate, First Federal has an option for everyone to help you secure a great rate and save.

LOCK & SHOP
If you want to lock in today's low rate and still take the time you need to find your dream home, you need First Federal's Lock & Shop program.

With Lock & Shop:

• Lock in your interest rate for up to 30 days while you shop for a house
• Allows for a 45 day period to close your loan after negotiations are complete.

EXTENDED COMMITMENTS
first Federal also offers Extended Commitment periods of 90, 120, 150 or 180 days with ways to protect you against long-term rate risk.

RE-LOCK OPTIONS
Most First Federal extended commitment programs allow you to lock in today's interest rate and re-lock at a lower rate if interest rates go down before you close your loan.

A Consumer's Guide To Mortgage Lock-Ins

What Is A Rate Lock-in?
A lock-in, also called a rate-lock or rate commitment, is a lender's promise to hold a certain interest rate and points for you, usually for a specified period of time, while your loan application is processed. (Points are additional charges imposed by the lender that are usually pre-paid by the consumer at settlement but can sometimes be financed by adding them to the mortgage amount. One point equals 1 percent of the loan amount.) Depending upon the lender, you may be able to lock in the interest rate and number of points that you will be charged when you file your application, during processing of the loan, when the loan is approved, or later.

A lock-in that is given when you apply for a loan may be useful because it's likely to take your lender several weeks or longer to prepare, document, and evaluate your loan application. During that time, the cost of your mortgage may change. But if your interest rate and points are locked in, you should be protected against increases while your application is processed. This protection could affect whether you can afford the mortgage. However, a locked-in rate could also prevent you from taking advantage of price decreases, unless your lender is willing to lock in a lower rate that becomes available during this period. It is important to recognize that a lock-in is not the same as a loan commitment, although some loan commitments may contain a lock-in. A loan commitment is the lender's promise to make you a loan in a specific amount at some future time. Generally, you will receive the lender's commitment only after your loan application has been approved. This commitment usually will state the loan terms that have been approved (including loan amount), how long the commitment is valid, and the lender's conditions for making the loan such as receipt of a satisfactory title insurance policy protecting the lender.

Will Your Lock-In Be In Writing?
Some lenders have pre-printed forms that set out the exact terms of the lock-in agreement. Others may only make an oral lock-in on the telephone or at the time of application. Oral agreements can be very difficult to prove in the event of a dispute. Some lenders' lock-in forms may contain crucial information that is difficult to understand or that is in fine print. For example, some lock-in agreements may become void through some unrelated action such as a change in the maximum rate for Veterans Administration-guaranteed loans. Thus, it is wise to obtain a blank copy of a lender's lock-in form to read carefully before you apply for a loan. If possible, show the lock-in form to a lawyer or real estate professional.

It is wise to obtain written, rather than verbal, lock-in agreements to make sure that you fully understand how your lender's lock-ins and loan commitments work and to have a tangible record of your arrangements with the lender. This record may be useful in the event of a dispute.

Will You Be Charged For A Lock-In?
You may be charged a fee for locking in the rate of interest and number of points for your mortgage. Some lenders may charge you a fee up-front, and may not refund it if you withdraw your application, if your credit is denied, or if you do not close the loan. Others might charge the fee at settlement. The fee might be a flat fee, a percentage of the mortgage amount, or a fraction of a percentage point added to the rate you lock-in. The amount of the fee and how it is charged will vary among lenders and may depend on the length of the lock-in period.

What Options Are Available For Setting The Mortgage Term?
Lenders may offer options in establishing the interest rate and points that you will be charged, such as:

• Locked-in interest rate/locked-in points
  Under this option, the lender lets you lock in both the interest rate and points quoted to you. This option may be considered to be a true lock-in because your mortgage terms should not increase above the interest rate and points that you've agreed upon even if market conditions change.
  
• Floating interest rate/floating points
  Under this option, the lender lets you lock in the interest rate and the points at some time after application but before settlement. If you think that rates will remain level or even go down, you may want to wait on locking in a particular rate and points. If rates go up, you should expect to be charged the higher rate. Because practices vary, you may want to ask your lender whether there are other options available to you.

How Long Are Lock-Ins Valid?
Usually the lender will promise to hold a certain interest rate and number of points for a given number of days, and to get these terms you must settle on the loan within that time period. Lock-ins of 30-60 days are common. But some lenders may offer a lock-in for only a short period of time (for example, seven days after your loan is approved) while some others might offer longer lock-ins (up to 270 days). Lenders that charge a lock-in fee may charge a higher fee for the longer lock-in period. Usually, the longer the period, the greater the fee.

The lock-in period should be long enough to allow for settlement, and any other contingencies imposed by the lender, before the lock-in expires. Before deciding on the length of the lock-in to ask for, you'll also want to take into account any factors that might delay your settlement. These may include delays that you can anticipate in providing materials about your financial condition and, in case you are purchasing a new house, unanticipated construction delays. Finally, ask for a lock-in with as few contingencies as possible.

What Happens If The Lock-In Period Expires?
If you don't settle within the lock-in period, you might lose the interest rate and the number of points you had locked-in. This could happen if there are delays in processing whether they are caused by you, others involved in the settlement process, or the lender. For example, your loan approval could be delayed if the lender has to wait for any documents from you or from others such as employers, appraisers, termite inspectors, builders, and individuals selling the home. On occasion, lenders are themselves the cause of processing delays, particularly when loan demand is heavy. This sometimes happens when interest rates fall suddenly. If your lock-in expires, most lenders will offer the loan based on the prevailing interest rate and points. If market conditions have caused interest rates to rise, most lenders will charge you more for your loan. One reason why some lenders may be unable to offer the lock-in rate after the period expires is that they can no longer sell the loan to investors at the lock-in rate. (When lenders lock in loan terms for borrowers, they often have an agreement with investors to buy these loans based on the lock-in terms. That agreement may expire around the same time that the lock-in expires and the lender may be unable to afford to offer the same terms if market rates have increased.) Lenders who intend to keep the loans they make may have more flexibility in those cases where settlement is not reached before the lock-in expires.

How Can You Speed Up The Approval Of The Loan
While the lender has the greatest role in how fast your loan application is processed, there are certain things you can do to speed up its approval. Try to find out what documentation the lender will require from you.

Much of the information required by your lender can be brought with you when you apply for a loan. This may help to get your application moving more quickly through the process. When you first meet with your lender, be sure to bring the following documents .

• The purchase contract for the house (if you don't have the contract, check with your real estate agent or the seller).
• Your bank account numbers, the address of your bank branch and your latest bank statement, plus pay stubs , W-2 forms, or other proof of employment and salary, to help the lender check your finances.
• If you are self-employed, balance sheets, tax returns for two to three previous years, and other information about your business.
• Information about debts, including loan and credit card account numbers and the names and addresses of your creditors.
• If you are renting, your landlord's name and address.
• Certificate of Eligibility from the Veterans Administration if you want a VA-guaranteed loan. Your lender may be able to help you obtain this.

Be sure to respond promptly to your lender's request for information while your loan is being processed. It is also a good idea to call the lender and real estate agent from time to time. By calling occasionally, you can check on the status of your application, and offer to help contact others such as employers who may need to provide documents and other information for your loan. It is also helpful to keep notes on your contacts with the lender so that you will have a record of your conversations.