When you are considering purchasing your first home or refinancing your existing home, it is important to lock in a quality mortgage rate. Mortgage rates can easily fluctuate and you want to be able to secure the lowest rate so you will pay less each month for your mortgage bill. But how do you lock in a quality rate? Below are a few signs to watch out for so that you can secure a low rate for your next mortgage loan, be it your first home or a refinance situation.
What is a mortgage rate lock?
A rate lock is a way for you to secure a set interest rate for a certain time frame. After meeting with your broker, you can be pre-approved for financing. At this time, you will be locking in a set interest rate. Let’s say you secure a rate of 3% for your new home loan with 120 days to sign. If you find a new home in this time frame, the 3% interest rate remains. Rates can shoot up or down so if you secure the 3%, you will not have to move your interest rate up to 4% if the market changes while you have locked in your rate.
Make An Offer When Interest Rates are Low
During your home search, pay attention to mortgage rates. If you see that they are low and you find a home you are interested in, make an offer. When you are given a contract to own the home, the interest rate at that time is what you are locked in at. Most lenders will lock in a rate for at least 30 days but you can have the option to lock in a rate for a longer time frame but this will be dependent on your lender and may have a cost.
Rising Interest Rates
If you notice a trend in rising interest rates, it’s time to lock in your rate if you are serious about buying a new home. Get an extended rate lock for at least 120 days so that you have time to find a home and do not feel rushed. Your rate will stay the same despite the fact that interest rates as a whole are on the rise.
Up and Down
If you find that interest rates are going up and down, you can benefit from locking in a set rate. Gain stability in your impending mortgage loan by locking in a rate that you know will not change.
Your best bet is to speak with your broker and see what they suggest as far as locking in interest rates. At Mortgage Guys, we stay on top of the changing market to know just what interest rates are and the ever-changing trends. We can help you determine if you need to lock in a rate now or wait until a better time to secure the best rate for your next mortgage.