Mortgage rate-lock agreements are legally binding agreements to hold a mortgage rate for a specified period of time. However, the only party bound to the agreement is the lender or broker. If you have a rate-lock agreement for a mortgage, you can break that agreement simply by not proceeding with the application and the loan officer.
Review the terms of the rate-lock agreement. In most cases, this is a one-page document detailing the rate that is locked in, what the principal mortgage balance will be and when the rate-lock agreement expires. It must include your signature, your co-borrower's signature, if applicable, and your loan officer's signature.
Find other viable, more beneficial mortgage options before you consider breaking the rate-lock agreement. If you have a low rate locked in and abandon it without an alternative, you may end up with a higher rate. This can happen when a new month begins and domestic and international rates adjust.
Lock in a new rate with a new mortgage lender prior to breaking your agreement. This will reduce the stress involved in filling out a mortgage application, pre-qualifying and verifying income and home value.
Abandon your agreement by contacting your original mortgage lender. You need not sign a new document to break the rate-lock agreement. You are only bound to a rate when you sign closing documents.
