Why It's Important To Lock In A Mortgage Rate And How To Do It
Posted on: 28 October 2017
If you want to buy a house, one of the first steps you should take is getting a preapproval letter from a mortgage lender. When you do this, your lender is stating that you qualify for a loan. You can then take this a step further by asking the lender to lock in the interest rate. Here is an explanation of why this is important and how to go about doing it.
Why It's Important to Lock in the Interest Rate
Interest rates on mortgages are a form of commodity; and because of this, they change all the time. In fact, mortgage rates go up and down daily or even hourly at times. When you get a loan to buy a house, the interest rate you get on the loan is very important. It helps determine how much your monthly payments will be and how much you will pay altogether for the entire loan.
If you qualify for a great interest rate, locking it in is important so that you are guaranteed that rate when you choose a house and close on the loan. If you do not lock it in, you might find out that your interest rate will be a lot higher when you are ready to close on the loan. With a higher interest rate, you will pay more each month for your payments. You will also pay a lot more for the house altogether.
How to Lock in Your Rate
Many lenders allow people to lock in their rates for around 30 days. This means if you buy a house and close on it within 30 days, you will have the rate the bank promised you. If you fail to close within that time, the rate could change. To lock in your rate, talk to your lender about it. Find out how long you can lock it in for.
If the time offered is not long enough, ask the lender if there is a way to lock it in for a longer period of time. Many lenders allow borrowers to lock in their rates for longer periods of time if they pay a fee to do this.
The interest rate you get on your loan is one of the most important factors about the loan. If you want a great rate, check out https://www.firstmortgagecompany.net/ for more information; also, talk to a lender today to find out what you can do to lock in the rate.
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