Locking In Rates


 

Locking In Rates

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When is it appropriate to ‘lock in’ our interest rate?

 

May 17, 2004

Good question. And, as with the answer to so many things, it depends. Some say:

1. It is considered a fool’s game to try to time the bottom of the market.
2. If you can’t afford to lose, you can’t afford to gamble.
3. Interest rates can, and do, go up…as much as 3/4% or more in one week.

Although we certainly have not seen evidence of it lately, interest rates can rise and fall often and rapidly. The Wall Streetmoney market” is manipulated by so many factors, it is extremely difficult to predict. Everyone is guessing what might happen, but no one really knows. If you want to be safe, you lock in as soon as your lender will allow it.

Sometimes you need a tough hide to “float” and ride along with the market fluctuations. If you do this, you believe interest rates will fall during the period of your mortgage processing, and you must be prepared to take the consequences if they do not.

Before you decide which way to go, be sure you understand your lender’s rules. Some allow you to lock in at the time of application, generally without cost for 15 to 30 days; some only let you lock in after you are approved for the loan and, in a busy environment, this can take a few weeks. Some will let you lock in for extended periods of time for a fee, often payable upfront and nonrefundable. Some will allow you a “float down” option that provides you with a lower rate if rates go down, typically for a cost.

As you can tell by some of my comments, I would suggest you lock in your rate as soon as you can…then forget about it. You will sleep better. There are not many people who can stand the uncertainty of gambling with this big commitment.

Discuss the options with your loan officer, be sure you understand whether you are getting a “lock” with the lender making the loan and what period it covers. I have heard horror stories of “locks” made for short periods when everyone is so busy, and the timeline for closing is just about impossible. That’s a promise that is useless. Be sure you understand what kind of company you are dealing with, whether you have a true commitment on your rate and fee, one that really be trusted and accomplished.

Good luck.

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Author: Louisville Kentucky Mortgage

I have helped over 589 Kentucky families buy or refinance their home over the last 18 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process. I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues. You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process. Give us a try or let us compare your options on your next mortgage transaction. Call me locally at 502-905-3708. Free Mortgage Pre-Qualifications same day on most applications. Email me at kentuckyloan@gmail.com with your questions I specialize in Kentucky FHA, VA ,USDA, KHC, Conventional and Jumbo mortgage loans. I am based out of Louisville Kentucky. For the first time buyer with little money down, we offer Kentucky Housing or KHC loans with down payment assistance. This website is not an government agency, and does not officially represent the HUD, VA, USDA or FHA or any other government agency. NMLS# 57916 http://www.nmlsconsumeraccess.org/ Joel Lobb Senior Loan Officer (NMLS#57916) American Mortgage Solutions, Inc. 800 Stone Creek Pkwy, Ste 7, Louisville, KY 40223 phone: (502) 905-3708 Fax: (502) 327-9119 kentuckyloan@gmail.com Company ID #1364 | MB73346 http://mylouisvillekentuckymortgage.com Equal Housing Lender

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