When an interest rate is locked, a lender is obligated to grant the loan at the agreed-upon rate, regardless of market fluctuations between time of mortgage approval and its closing. Work closely with your loan officer, because rate-lock timing differs depending on your individual circumstances. Get your interest rate locked when it’s best for you!
When Can You Lock?
You have the ability to lock your interest rate in advance of your initial approval, and are required to find the home you’re looking for first. This is because your rate lock comes with an expiration date and you don’t want to be shopping for a house while the clock is ticking on your locked. You can extend your rate lock, but there are “extension costs” you will pay. The shorter the locked rate, the cheaper it will be; but make sure you have time to get your loan process finished before you lose your rate!
Does it Cost Money to Lock in Your Rate?
The cost of locking your rate can be a percentage of the total mortgage, added to the interest rate or a flat fee. Short-term rate locks (about 60 days) are typically free of charge!
Keep these factors in mind when going through your process and match your lock timing with your financial priorities!
If you are unsure what’s right for you or have any other questions, contact the Housing Buzz team today!