If you’re ready to apply for a mortgage loan, the odds are you’re following the ups and downs of mortgage interest rates carefully. This isn’t surprising; a higher interest rate will make your monthly payment bigger. A lower one can save you a significant amount of dollars each month.
But when should you lock in a mortgage rate? That’s a challenge that many borrowers face.
In a rate lock, your mortgage lender agrees to hold the current interest rate for which you’d qualify for a certain number of days. Your lender might agree to hold an interest rate of 4% on your 30-year fixed-rate mortgage for 15 or 30 or 45 days, for example.
If you don’t lock, your rate might rise before you complete the loan-application process. But remember that average interest rates might also fall after you lock in a rate. That is a risk that you take when ordering a lock.
Remember, too, that locking a rate usually isn’t free. You may have to pay for the service, though what you pay varies depending on your lender and how long you want to lock-in that interest rate.
If you’re debating whether locking a rate makes sense for you, call us. We’d be happy to talk about the pros and cons of finding a rate and locking it in place.