Apply for a mortgage
You must apply for and be pre-approved before you lock in your rate. You’ll need to give the lender financial details throughout the application process, including your income, debt, and assets, so they can decide how much and at what interest rate to offer you.
Request a rate lock
You can ask your lender for a rate lock once you’ve been pre-approved for a mortgage. You must indicate how long you want the rate locked in for while doing this, typically done over the phone or in person. Although some may provide longer or shorter lock-in periods, most lenders offer rate locks for 15, 30, 45, or 60 days.
Pay any fees
While some lenders offer this service for free, others charge a fee for locking in your mortgage rate. If your lender assesses a payment, you must pay it upfront. In most cases, this cost is non-refundable, even if you choose not to proceed with the loan.
Obtain the rate lock in writing: Your lender needs to give you a written confirmation of the rate lock agreement as soon as you’ve asked for one and paid any associated costs. The interest rate that is locked in, the duration of the lock-in period, and any fees or terms related to the rate lock should all be included in this document.
Close on time
You must close your mortgage during the allotted lock-in term to benefit from your locked-in rate. Your rate lock could expire, and you would have to pay a higher interest rate or apply for a new rate lock if you don’t close on time.
Rate locks aren’t always required, and sometimes, they may not be the best option for you. You might be better off floating your rate and taking advantage of reduced rates as they become available if interest rates are down. Before deciding, it’s crucial to review your alternatives with your lender and carefully weigh the benefits and drawbacks of locking in your rate.
Compare rates from other lenders
It’s a good idea to shop around and compare prices from a few different lenders before locking in a rate. Discovering the best deal for your circumstances is crucial because other lenders may provide varying rates and terms. Remember that you should also consider the lender’s costs, reputation, and customer service in addition to the interest rate.
Recognize the terms of the rate lock
It’s critical to read and comprehend the conditions of your rate lock agreement with attention. Be mindful of the duration of the lock-in period, any costs or restrictions related to the rate lock, and the consequences of unlocking the lock. If your closing is delayed, some lenders can let you extend the lock-in period for a fee; others might charge you a penalty if you cancel the loan or go with another lender.
Watch interest rates
While your mortgage application is being processed, keep a watch on changes in interest rates. A rate lock can assist in shielding you from rising rates if they do so and guarantee that you receive the rate quoted at the time of loan application. In contrast, think about floating your rate and seizing the opportunity to take advantage of reduced rates when they become available if rates are down.
Get in touch with your lender
Maintaining constant contact with your lender during the mortgage application process is crucial. Be bold and ask your loan officer any questions or concerns you may have concerning your rate lock or the loan procedure in general. To help guarantee a seamless and fast closing, it’s also critical to deliver any extra information or documents your lender requests as soon as possible.
Choose the ideal moment to lock in your rate
When locking your mortgage rate, timing is everything. You can lose out on later-available cheaper rates if you lock in your rate too soon. However, if you wait too long to lock in your rate, rates can increase, and you’ll have to pay more. It’s critical to keep a close eye on changes in interest rates and consult with your lender to choose the ideal moment to lock in your rate.
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