Introduction:
The Lock and Shop feature in the Point of Sale (POS) system is designed to offer borrowers flexibility and peace of mind as they search for a home to purchase. This article explains the concept of Lock and Shop, how it works within the POS, and its benefits for borrowers.
What is Lock and Shop?
Lock and Shop is a mortgage option for borrowers who are looking to buy a home but have not yet found a property. This feature allows borrowers to lock in their interest rate for a specified period, giving them the security of a fixed rate while they search for their ideal home. Typically, this involves a long lock period (e.g., 90 days) and a shorter period to find a home (e.g., 45 days).
How Lock and Shop Works in the POS:
Rate Lock Period:
Borrowers can lock in their interest rate for an extended period, such as 90 days. This lock period ensures that they secure a favorable rate even if interest rates rise during their home search.
Home Search Period:
Within the lock period, borrowers are given a specified time, such as 45 days, to find a home. This home search period can be customized based on lender preferences and borrower needs.
Configuration Options:
The Lock and Shop feature is highly configurable. Lenders can set the duration of both the rate lock period and the home search period to suit their policies and market conditions.
The feature can be enabled or disabled based on lender preferences and borrower eligibility.
Steps in the Lock and Shop Process:
Pre-Qualification:
Borrowers complete the pre-qualification flow in the POS, providing basic information such as loan amount, down payment, and personal details.
Rate Lock:
Once pre-qualified, borrowers can choose to lock their interest rate for a specified period. The POS will display the available lock options, including the duration of the rate lock and the home search period.
Home Search:
During the home search period, borrowers have the flexibility to look for properties while being assured of their locked-in rate. The POS will provide reminders and updates about the remaining time to find a home.
Application Completion:
After finding a home, borrowers complete the full loan application, including providing credit consent and necessary documentation. The POS guides borrowers through this process seamlessly.
Property Address and Purchase Contract:
When the borrower finds a property, they will have the task to provide the final property address and upload the purchase contract. The POS will prompt borrowers to fill in known details like address, purchase price, and down payment amount.
Pricing Update:
After the property details are provided, the pricing may be updated to reflect any changes based on the original rate sheet under which the rate was locked. This ensures that the borrower’s rate and terms are accurate and current.
Closing:
Borrowers must close on their chosen property within the rate lock period (e.g., 90 days). The POS helps manage timelines and tasks to ensure the closing process is smooth and timely.
Benefits of Lock and Shop:
Rate Security:
Borrowers can secure a favorable interest rate early in the home buying process, protecting themselves from potential rate increases.
Flexibility:
The extended rate lock period and customizable home search period provide borrowers with the flexibility to find the right home without feeling rushed.
Peace of Mind:
Knowing their rate is locked, borrowers can focus on finding their ideal home, confident that their financing terms are secure.
Customizable:
Lenders can configure the Lock and Shop feature to match their policies, ensuring it fits seamlessly into their existing processes and meets borrower needs.
Conclusion:
The Lock and Shop feature in the POS is a valuable tool for borrowers who want to secure their mortgage terms early while taking the time to find the perfect home. By offering a customizable and flexible solution, Lender’s POS ensures borrowers have a smooth and stress-free experience from rate lock to closing.