Congratulations! Now that you have found a new home loan or refinance that suits your current financial needs, and you are pre-approved, it’s time to lock-in your interest rate. Since mortgage rates can change daily, it’s important to understand how to best utilize a mortgage rate lock to your advantage.
Key Questions About Mortgage Rate Locks:
What is a Mortgage Rate Lock?
A mortgage rate lock occurs when your lender locks in the interest rate for a specific period, usually until closing. Once a rate has been locked, it remains unchanged for the duration of the rate lock period regardless of market changes. For example, if you’ve been locked in at 6% for 40 days and rates increase during that time – you would still be locked in at 6%.
Why Lock-In Your Rate?
Locking-in protects you from any potential interest rate increases in the market during the lock period. As a result, you can expect consistent principal and interest payments so you can budget accordingly. Even if interest rates drop after yours is locked-in, you can secure a float-down provision to take advantage of the reduced rate before closing on your mortgage.
When Should You Lock-In Your Rate?
If you are under contract on a home and your lender has received a loan application and purchase contract, it’s a good time to consider locking in that interest rate. Pay attention to market trends; if interest rates are rising steadily and predictions seem unfavorable for buyers, it’s wise to lock–in sooner rather than later to protect yourself from an increase in interest rates. If the terms of your mortgage fit your budget and you are comfortable with the subsequent monthly payments, it might be time to get locked–in.
Since each situation is unique, it’s important to consult a mortgage professional for guidance based on current market trends and your personal financial goals. To learn more, contact one of our Home Loan Experts at 877.785.5422 to get personalized advice and explore your best options.
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*As a member of the AmeriHome family, borrowers are part of the AmeriWallet Rewards program. If you completed a home loan with us once, you will qualify for a $750 lender credit for all of your future refinances or home purchases done with AmeriHome, for any property you own. To qualify for this offer, you must have previously financed the purchase of a home or refinanced with AmeriHome. You have financed with AmeriHome when AmeriHome Mortgage Company, LLC appears on the previous Promissory Note for your loan, and you are listed as a borrower on the Note. Credits will be applied only if your loan closes with AmeriHome. This offer can not be combined with any other offers and is not applicable for FHA Streamline, or VA IRRRL Refinance transactions. Other restrictions may apply. Terms and conditions are subject to change. AmeriWallet Rewards program is subject to termination without notice.
