When is the best time to lock a mortgage rate?
A mortgage rate lock helps protect homebuyers from fluctuating mortgage rates as they're getting ready to buy a home. It locks in the interest rate for a loan for a certain period of time until the buyer makes it to the closing table. By locking in a rate, buyers will know what to expect and won't have to worry about rising rates later.
However, if rates dip, homebuyers realize they could get stuck paying more money each month. So it can be a catch-22.
The best times to lock in a mortgage rate right away:
1.An offer has been made, accepted and is under contract. Many lenders lock in a rate for free for 30 days. Closing these days sometimes run over the 30 day mark, and often times your Lender will offer an extension at no cost. However, every lender is different. Make sure to ask your lender.
2.Interest rates are rising. If interest rates are trending higher, lock in sooner rather than later, say mortgage experts.
3.Interest rates are volatile. If interest rates are going both up and down, buyers may want to lock in sooner for greater stability during their house hunt. "Rates today are unusually volatile – they are making large moves up and down in short periods of time," says Joe Parsons, a loan officer at Caliber Home Loans in Dublin, Calif. "For this reason, prudent borrowers are locking their rates early in the process."
4.A buyer may not otherwise qualify for a loan. A buyer may need to lock in a rate sooner if they are borrowing near their limits because any upward fluctuation could prevent them from getting their loan approved.
Consult your preferred Realtor – Teri Kelly for more information!