When to Lock Your Mortgage Rate

Tim Evans •evanstj@gmail.com•(601)606-5177

When to Lock Your Mortgage Rate

Locking in your mortgage rate seems like a gamble, and it is. The trick is knowing when to go all-in for the best chance at saving money.

A rate lock is a guarantee from the mortgage lender that your mortgage will stay at a particular rate, at a certain price, and for a specific time period.  The cost of a loan is usually expressed in points–where 1 point is equal to 1 percent of the loan amount. A rate lock protects the borrower from the rising interest rates that may come with a growing real estate economy. A rate lock is good for about 30, 45, or 60 days. After that, the borrower is no longer immune to the rising interest rates.

What happens if the rates go up or down after you lock the mortgage? If interest rates rise during your lock-in period, you will not be affected. If the interest rates end up dropping, you will not be able to take advantage of the low-interest rates; instead, you will pay the higher mortgage rate you locked.

When should one lock their mortgage? Before you lock your rate, it makes sense to sign a purchase agreement on a particular property and find a good mortgage loan with a great interest rate. You don’t want to lock it right away, as processing the mortgage may not line up with your secured mortgage. You want it to affect you in the best way possible, and last the maximum amount of days. Ask your mortgage lender to share the average loan processing time and consider locking in the rate for that amount of time to protect yourself.

A locked mortgage should work for you, not against you. For all of your home buying needs throughout the Solana Beach, California area, contact the professionals at Ranch & Coast Mortgage Group Inc.