Shoud I lock my interest rate?

Question

This may be a silly question, but, the reason I ask is because I am obviously confused as to whether I should lock in now, or wait until I close in September, and see if it drops or not. I know, I know...either way, I will be taking a chance. I just want to know from current homeowners when (or if) you made the decision to lock your interest rate. Thanks!

Answer 1

Usually locks have a clause that states if the rate drops, you get the lower, make sure first.

Answer 2

Hello -

The next meeting in regards to the Fed Fund Rate is on Monday. Currently, there is only a 30% probability of another rate hike. The consensus is that raises in interest rates will take a pause.

In regards if you should lock your rate, have you been given the variances of a 15 day, 30 day and 45?

Often times you will be quoted a rate with an offer to lock, but they fail to tell you the time frame that the rate lock is good for.

When do you close in September? If it is later in the month, you would need a 45 day rate lock. Be specific with your lender and ask them to fax you the rate lock.

Interest rates for home loans are based on the daily trading of Mortgage Backed Securities and not the 10 year Treasury note as many believe.

The way I advise my clients is directly related to what is taking place in the daily trading of the Mortgage Backed Securities. Currently, there is less than a 30% probability of a hike. Therefore, if the rates do not get raised by the FED on Monday, I'd float.

Then work with a lender that can let you know when their might be an intra-day reprice, where you can lock in a better rate. Again, the rates can change daily.

Hope and trust that helps. Congratulations on your new home.

Kindest Regards,
Darren Meade

Answer 3

When you lock in an interest rate on a mortgage, a spoken commitment isn't worth the paper it's printed on.

Get your rate lock in writing, in the form of a loan commitment from the lender.

Many mortgage borrowers come to grief because of misunderstandings about rate locks. Some borrowers fall prey to sneaky loan providers; others confuse a rate quote with a rate lock. Some are victimized by bad timing and it's no one's fault.

Long-term mortgage rates remained fairly steady in the last quarter of 2005 and into the beginning of 2006. But they have been rising lately, and borrowers feel nervous, wondering whether they should lock now or wait until closer to the closing date.

A rate lock is a legal commitment between the lender and the borrower. The lender promises a loan at a specified interest rate. The borrower sometimes promises to pay certain points and fees (especially if the lock is for more than 30 days). The borrower and lender (and mortgage broker, if there is one) agree to do their best to close the loan on or before a specified date. If the loan isn't closed by the deadline, the contract expires.

Locks typically last for 30, 45, 60 or more days. The longer you lock, the more likely you'll have to pay a fee for the privilege.

Think of a rate lock as insurance that you'll get your loan at the agreed-upon rate, even if rates rise. The lock protects the lender, too, because you implicitly are promising to borrow at the specified rate, even if rates drop.

Deciding whether and when to lock is more art than science because it involves guesswork. The decision depends upon how much you will have to pay to lock, how long you plan to have the mortgage and what you guess will happen to rates.

Many lenders don't charge a fee to lock within 30 days of closing. If you want to lock beyond 30 days, you are likely to have to pay a fee. These fees aren't standardized. They vary from lender to lender and from loan type to loan type, and are expressed as points, where 1 point is 1 percent of the loan amount.

Generally, you can expect to pay from a quarter of a point to a half a point to extend a rate lock for 30 more days. In other words, if your lender lets you lock free within 30 days of closing, you might pay one-quarter to one-half a point to lock for 60 days. A 90-day extension is likely to cost a point, maybe more.

Answer 4

LOCK LOCK LOCK

I'm not a homeowner, but am a personal banker for one of the top banks in America.

Interest rates are not coming down again for awhile. In fact, before September rolls around they are going to go up again by at least .25%, and in reality there could be 2 increases in that time. Do your homework though. There's a lot of competition out there and every bank wants your business!! Use that to your advantage. Play the loan officers against each other and get it as low as you can. Honestly, right now, you should be able to talk them down to about 6.49% if your good at talkin' and you're credit score is high enough. Another tip is to talk to credit unions. They need customers more badly than most banks do, so there rates are usually more competative both for loans and cd's. (But you didn't hear that from me :} )Bottom line though, don't delay, beat the federal reserve to the punch, and lock now. Don't let them raise those rates again before you lock your rate!!!!

Answer 5

You didn't mention what the rate is that you would be locking in at. Ther only reason to lock in on a rate is because it is a good rate.

Answer 6

MAny lenders will lock you in and offer a free relock. I have a free 120 day lock with a free relock option to my customers. Look around and see if this is an option for you. takes the risk out.

Answer 7

i locked in the rate that i was comfortable in 3 months before i closed. i recommend that. i dont think youll regret doing it.