Basics on Mortgage Rate Lock-In Timing

When it comes to getting a mortgage loan, few factors are more important than your interest rate. Even a small change in your interest rate could have major implications for your total expenses across the life of a mortgage, and you have to do everything in your power to get the best rate available.

At Altius Mortgage and our partners at Mortgage Ogden, we’re here to help. We have several mortgage rate tools available, plus experienced pros who can help you with everything you need to know about your interest rate. One of the most common questions we get here: When should I lock in my interest rate? Let’s go over all the basics you need to know here.

Interests Rate Basics and Standard Timing

Interest rates on the mortgage market are constantly fluctuating based on several market factors – the economy, the stock market, the Federal Reserve, and even several areas of geo-politics. You don’t necessarily need to know every little detail of how rates rise and fall, but you do need to know this: During your loan process, market rates will almost certainly go up and down.

So when should you lock yours in, then? You’ll usually have lots of options here, but most people tend to lock their rate in a couple weeks before the loan closes – this is so you have a good idea of the rate and no unexpected issues take place. But there might be some other situations where you make a different choice, as well.

Other Rate Lock Options

There are several rate lock timeframe options out there, including options ranging from 30 days to 90 days. The longer your period, the higher rates will generally be – it naturally costs a bit more to lock in your rate for a longer period of time. No matter what, though, even if you can get a great deal, we never recommend locking in later than 15 days before final closing time. One example of when you might look for a longer lock-in period might be if your home is under construction – you might want a 90-day lock if you think rates might rise during this period.

Rate Myths

There are two big misconceptions in the mortgage rate world:

• I can get a lower rate with the same lender after lock-in: Some borrowers assume that as long as they stick with the same lender, they can get a lower rate if market interest rates drop after lock-in. This often isn’t true, or may require a fee – you’re safe from rates rising after lock-in, but this same option isn’t always available on the flip side. Many lenders, though, do have programs that allow you to “float down” to more favorable rates.
• I can skip rate-lock and proceed to closing directly: This is a big gamble, and one that usually doesn’t pay off. Locking in a rate in advance brings you peace of mind and prevents any risk of you suddenly dealing with far higher rates you can’t get out of.

For more on when to lock in your mortgage rate, or to learn about any of our mortgage loan services, speak to the staff at Altius Mortgage today.