Rate Protection Example Sample Clauses
A Rate Protection clause is designed to safeguard parties against fluctuations in interest rates or pricing terms during the course of a contract. Typically, this clause ensures that the agreed-upon rate—such as a loan interest rate or service fee—remains fixed or is capped for a specified period, regardless of market changes. For example, in a loan agreement, the borrower may be protected from rising interest rates for the first five years. The core function of this clause is to provide financial predictability and stability, thereby reducing the risk of unexpected cost increases for the protected party.
Rate Protection Example. A customer capped rate is 8.375% with 1 Point and 1% Origination Fee. If the closing occurs on or before the rate cap expiration, the market rate in effect at 12:00p.m. EST, five (5) calendar days before closing will be used to determine the customer’s rate. • The market rate , which is 8.00% with 1 Point and 1% Origination Fee, is lower than the capped rate – Customer will receive the market rate • The market rate, which is 8.375% with 1 Point and 1% Origination Fee, is the same as the capped rate – Customer will receive the capped rate. • The market rate which is 8.75% with 1 Point and 1% Origination Fee, is higher than the capped rate – Customer receives the capped rate. ** Please note that the above rates are intended to be used as examples only; they do not reflect current market conditions or your own mortgage interest rate.
Rate Protection Example. A customer capped rate is 8.375% with 1 Point and 1% Origination Fee. If the closing occurs on or before the rate cap expiration, the market rate in effect at 12:00p.m. EST, five (5) calendar days before closing will be used to determine the customer’s rate. • The market rate , which is 8.00% with 1 Point and 1% Origination Fee, is lower than the capped rate – Customer will receive the market rate • The market rate, which is 8.375% with 1 Point and 1% Origination Fee, is the same as the capped rate – Customer will receive the capped rate. • The market rate which is 8.75% with 1 Point and 1% Origination Fee, is higher than the capped rate – Customer receives the capped rate. ** Please note that the above rates are intended to be used as examples only; they do not reflect current market conditions or your own mortgage interest rate. _____ Lock Option: By selecting to lock your interest rate at (lock interest rate)%, you have committed to the rate and fee combination and lock period specified in the Statement of Terms section of this document. If any information in the Loan Information and/or Statement of Terms sections(s) changes, your interest rate and point combination may be subject to change. If your mortgage loan does not fund by the lock expiration date, your rate will be subject to the higher of the market rate or locked rate.