What should I consider when deciding whether to lock my interest rate in?
Mortgage rates are difficult to predict as the stock market changes daily.
If you feel that rates are going to increase, then it's best to lock in at your current rate. Just make sure that you do so during the rate lock period. There is a finite amount of time you have to lock in the rate. In most cases, when purchasing a new home, the loan usually takes 30-45 days to close (could be longer in some states or if there is still negotiating to do). Make sure you know the estimated closing date so that you can choose the rate lock period. Also, if you refinance and have secondary financing on your home that won't be paid off, make sure you allow some extra time to contact the lender to get their permission.
If you think rates might drop while your loan is being processed, you can take a risk and let your rate "float" instead of locking. After you apply, you can lock in the rate.
- What interest rate do you pay on a Certificate of Deposit?
- Are there any prepayment penalties charged for these mortgage loan programs?
- Should I perform an APR comparison to decide who offers the lower rates and fees?
- Is it worth it to pay points in exchange for a lower interest rate?
- What is included in closing fees?