Rates are Low – Do you need to lock your Rate right Away?

    percentWhile mortgage rates are STILL at all-time lows, they are still apt to fluctuate before your loan finally closes. Some borrowers have offered locking in rates.  When the interest rates are locked, the term of the loan freezes while it is being processed.

    This can save borrowers thousands of dollars during the duration of their mortgage.

    If you are refinancing your mortgage loan, locking in your rate can be extremely important.  A quarter of a percentage point could alter the calculations and make refinancing less financially attractive.

    Are you just looking for some peace of mind?  Rate locks just might be able to provide this.  This is also one less thing to worry about during the application process.

    Once a borrower has a purchase agreement, the lender usually will give a loan rate guarantee.  However, if you are preapproved you may still get this guarantee for your mortgage.

    There is a cost for reserving an interest rate. How much it will cost you depends on the length of time and the amount of the loan.  The longer the lock, the more you will pay.   Some lenders will reserve the lock for up to six months, however the majority of locks are usually 30, 45, and 60 days.

     There is also a ‘free’ lock that some lenders do offer, this may only be for up to 30 days.  Other lenders may charge ‘points’ based on the loan size.  This could add up to hundreds of dollars.  Every point is equal to 1% of the loan amount.   At times these charges are refundable at closing.

    Some borrowers, if unsure when their home purchase is closing, may decide to delay taking a rate lock or skip it altogether.

    The ‘know how’ of the time it take to lock in a rate requires knowing the mortgage process and an estimate from the lender on how long the process take to approve the loan, complete the paperwork,  and finish all other requirements.  Some lenders can have this done within 15-20 days, while some take longer.  If you have any questions feel free to contact us today!

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