When an interest rate locks, a lender must grant the loan at the agreed-upon rate. This is regardless of market fluctuations between the time of mortgage approval and when it closes. This comes with the benefit of protection if market rates go up; but also your higher rate will be honored if rates go down. Our loan officers will work closely with you on this because rate-lock timing differs. It could depend on your individual circumstances. Get your interest rate locked when it’s best for your wallet!
When Can You Lock?
You have the ability to lock your interest rate in advance of your initial approval, but you have to find the home you’re looking for first. This is because your rate lock comes with an expiration date – you don’t want to be shopping for a house while the clock is ticking on your rate lock. You can extend your rate lock, but there are “extension costs” you will pay. These costs depend on the amount of the loan and the length you want to extend it. 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 to home ownership and make sure to match your lock timing with financial priorities!
If you are unsure what’s right for you or have any other questions, contact our team today!