Mortgage rates are volatile numbers. They have the potential to change on the fly, and not always for the better. These days, interest rates might spike before you can act on the real estate you’re hoping to own.
If a mortgage pro quotes you at a specific rate, how long is it valid? If interest rates increase overnight, can you still score the rate listed on your quote?
If you want to ensure that you’ll receive the low interest rate quoted originally, talk to your mortgage professional about “locking in” the rate. What does this mean? Today we’ll discuss the ins and outs of locking in your interest rate and how it can help you save money on your mortgage.
Locking In Your Mortgage Rate
Locking in your mortgage rate protects you from rising interest rates from the time that you apply for your loan until closing.
Unfortunately, if rates decrease, the process gets a bit complicated. If you’ve locked in your mortgage rate and rates drop, you’ll be stuck unless your agreement includes a float-down option to allow you to take advantage of a potential decrease.
How Long Is a Mortgage Rate Lock Valid?
Locking in your mortgage interest rate gives you a little stability in an ever-changing financial climate, but a rate lock doesn’t last forever. Here’s what you need to understand:
- Your rate lock period can begin anywhere from the date you finalize your loan application until five days before closing.
- Most rate locks last between 15 and 90 days, with the shorter rate lock periods having cheaper rates than the longer ones.
- If your rate long expires before you close on your mortgage, you might be able to pay extra to continue the lock period.
Understanding “Lock and Shop” Options
If you want to be proactive about scoring a low interest rate, some lenders offer a “lock and shop” program. This type of program allows the borrower to lock in a desirable rate before shopping for a home.
If you go this route, you’ll know exactly what to expect financially during your house hunt. On the downside, you’ll pay a slightly higher rate than you otherwise would in exchange for the convenience.
Contact Us Today!
Want to lock in a low interest rate before they soar as expected? Contact MortgageDepot today to learn how to make the most of a rate lock!
Connect with one of our loan consultants today to learn more!