When shopping for a home loan, one common question that most people have is this… Should I lock my mortgage rate today or not. That is the question we’ll look at below.
Should I Lock My Mortgage Rate Today?
Some people are on the fence about this. So we are here to help you out! Hopefully, this article will help you gain an insight on whether or not you should lock your mortgage rate in today.
The decision of when to lock in a rate for your mortgage is a tough one. Interest rates (which mortgage rates are based on) constantly go up and go down.
No one knows what they’re going to do tomorrow, or the next day or next week. Not even the experts.
The bottom line here is there is no perfect time for locking things in. And it is not recommended you try to time the market when locking in an interest rate. All you’ll do is drive yourself crazy!
So if there is no way to predict when the rates will go up or down, when is the best time to lock in a mortgage rate?
Well, the answer to that question comes down to a number of different factors.
Factors To Help You Decide When To Lock In A Mortgage Rate
Generally, you want to do this when you feel like you have the best rate possible and do not want it to increase.
The best thing to do is shop around. Get the rates, fees, terms, etc. from a few different mortgage lenders. Then, when you find a rate that you’re happy with and fits with your budget, lock it in.
Once you do, we’d recommend not looking at mortgage rates any more. If they go down after you lock them in, you’re just going to feel bad about it. Even though, as you already know, there’s no way to guess how rates will change.
Just be happy that you have a rate you’re happy with and will be getting a house you love. If rates go down so much after you close on your home, you can always refinance at a lower rate.
Purchase vs Refinance?
Another factor that will affect when you do this depends on whether you are purchasing a house or refinancing.
If you’re buying a home, the best time to lock a mortgage rate is when you have a home you are ready to buy and you have your loan approval.
For those who are refinancing, it’s a bit different. The best time to lock in a mortgage rate in this situation is when you’ve found a loan with the best combination of terms and conditions for your financial situation.
Rising interest rates can make your down payments more expensive. So the best time to lock in mortgage rates is when you think you have found a great rate you’re happy with.
Why Lock in a Mortgage Rate?
When you receive a loan offer, the lender will ask you if you want to lock the interest rate. Once you do this, then no matter what happens to interest rates, the rate for your loan won’t change.
Locking your rate in like this will give you peace of mind. It will make sure that you have no surprises when it comes to closing on your home. Once you get your lock in place, you will know exactly how much your monthly mortgage payments will be so you can plan accordingly. And you don’t have to worry about them changing (unless you refinance or a get an adjustable rate mortgage).