If your financial situation changes, you may want to pay off your loan before the due date. Because some lenders rely on interest payments over a long period to make a profit, they may charge you a penalty fee. If interest rates are rising quickly at the time you apply for a loan, you should ask about a lock-in. If the rate rises while your loan is in process, the resulting increases in interest and total loan amount may kill your chances of approval. A lock-in agreement specifies that the rate quoted at the time of application remains in effect for a certain period.
Some lenders charge a small fee for locking in an interest rate.
Until you repay your loan in full, a financial institution has a claim to your house. If you fail to make your payments, the lender forecloses or takes ownership of your home, selling it to try to recoup money lost on the bad loan. The insurance is additional protection for the lender, guaranteeing compensation if you fail to repay the loan. If you qualify, you can get a loan with no money down. For more information, contact the VA office in the Federal Government listings in your phone book.