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Getting The Lowest Home Mortgage Interest Rate - Locking in Your Rate
By Carrie Reeder
You're getting ready to close and you're wondering, "Should I lock my rate?"
If you are happy with your current interest rate and feel that it is low,
then you may want to lock it and not worry about fluctuating home mortgage
inteterest rates on the open market. If you would like the interest rate
to be lower, and feel that if you wait interest rates may decrease, then
you can hold off or ask for a long-term, float-down option rate lock. Although
a possibility, long-term rate lock opens the possibility of the rate increasing
while you're waiting for a decrease, and often times come with fees.
What is a Mortgage Rate Lock?
A rate lock guarantees you that the home mortgage interest rate will
not climb past a certain rate if the loan is closed by deadline. For example,
if you lock the rate at 6 percent 28 days before closing, and rates rise
over the next month, your loan's interest rate will not change if you close
on time. If you decided not to lock and the rates increased, you would end
up paying the higher rate.
When locking, fees are common when the lock is secured beyond 30 days, and
especially if it locked beyond 60 days. If the rate is locked before 30 days,
in most cases you will not be charged a rate-lock-fee.
Long-term Mortgage Rate Locks
Many long-term locks, say a 180-day lock, offer a float-down option, which
means that if home mortgage interest rates have dropped while
you're closing, you can secure the lower rate. Remember though, the interest
rate is not yours until you've locked your rate. Home mortgage interest
rates change every day, sometimes more than once, and until you've
told your lender to lock the rate on your loan, your interest rate will change
Written Confirmation for Mortgage Rate Lock
When you lock your rate make sure to get this confirmation in writing. The
written confirmation should include the rate, the expiration date, and all
terms and fees. This step is crucial and will eliminate any misunderstandings
about your rate in the future.
Carrie Reeder is the owner of
ABC Loan Guide,
an informational website about various types of loans.
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