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Interest Rates
When is the Best Time to Lock?
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When it comes
to mortgage loans and interest rates, it's never a good idea
to gamble. That's why I typically advise my clients to lock
in an interest rate at the earliest opportunity. This is
just one step of the standardized system we have put in
place to ensure the best possible loan experience for each
borrower that we work with.
A mortgage loan cannot be closed without a locked-in rate,
and there are three main elements to take into
consideration:
- Interest Rate
- Points or fees
- Length of the lock
Locking in a
rate does not obligate the borrower to commit to the loan
until the loan is actually closed. The lock is merely a
security measure designed to eliminate the risk of market
volatility throughout the duration of the purchase or
refinance transaction. As long as the loan is approved and
funded before the end of the lock period, the borrower will
receive the interest rate quoted. |
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When a lender permits an extended lock-in period, the borrower
will likely face a higher interest rate or additional fees
that could be quoted as points. In other words, the borrower
pays for the lender to take on the extended risk of being
exposed to potential changes in the market.
For example, let's say a 30-day rate lock commitment costs the
borrower one-half point, while a 60-day rate lock commitment
costs one full point. If the borrower in this scenario needed
the extended lock period, but did not want to pay points, then
an alternative would be to accept a slightly higher interest
rate. In this case, a 60-day lock would typically have a
higher interest rate than a 30-day lock.
Our standard procedure is to lock in a rate as quickly as
possible. My team and I want our clients to know that while
interest rates fluctuate daily, most lenders do not want to
lose any business because of it. If a significant rally causes
interest rates to drop 0.25% or more, we know that we can most
likely renegotiate the rate. In many cases, lenders prefer
this option over losing the loan to another lender. On the
other hand, if we'd allowed our clients to sit on the fence
and not lock in their rate, we would have exposed them to
market volatility without a safety net. Then, if rates were to
increase, the borrower might no longer qualify for the loan
they want - a situation that we want to avoid at all costs.
By knowing our clients' needs and working intimately with them
to make the right decisions early on, my team and I are proud
to say that we have helped them to achieve their home
ownership dreams.
If you'd like to learn more about the loan programs we
have available, please call me! |
Call Today!
(860) 649-LEND (5363)