How to Lock in a Mortgage Rate

How to Lock in a Mortgage Rate

Mortgage Rate Locks May Give You Peace of Mind

When it comes to buying a home, you may hear “location, location, location” is key. When it comes to obtaining a mortgage for a home, timing is of the essence, among other things. Like the selling price of homes, mortgage interest rates fluctuate as the economy and housing market fluctuate. If you find a lender who offers a great rate that you think may be difficult to beat, you may want to consider a mortgage rate lock. Mortgage rate locks, or rate locks, are agreements between you and a mortgage broker or lender that freezes an interest rate for a certain period. In this week’s blog, we’ll discuss the mortgage rate lock process, so you can evaluate how this special contract may benefit you during the homebuying process. Remember to call the mortgage professionals at Lucey Mortgage Corporation in Mount Pleasant, SC, with any questions you may have.

Mortgage Rate Locks: The Basics

The homebuying process has several key steps in the path towards closing. First, borrowers will need to get loan approval from a lender they feel comfortable with. At any point after this, if the lender offers it, a borrower can choose to “lock in” an interest rate. If you find a lender who has offered an amazing rate, you can lock it in right after loan approval, even before you find a home you’d like to purchase. It’s important to keep in mind, however, that mortgage rate locks have expiration dates and cost money to extend. Because of this, many borrowers choose to sign a mortgage rate lock once they’ve signed a purchase agreement.

Average Mortgage Rate Lock Periods

Most mortgage rate locks average 30 days, but can last from 10 days up to 120 days or more. The longer the lock, the higher the price, which is translated in “points,” which are reflected in your mortgage rate. One point is 1% of the loan amount. The more points you pay, the lower your locked-in rate. The cost of points can be included in your mortgage loan and paid with your monthly payments, in most cases.

The Float-Down Option

If you have a locked-in rate, and interest rates fall during your lock period, you unfortunately cannot take advantage of those lower rates. You can include a provision known as a “float down,” in your rate lock, which allows you to take advantage of lower rates during your lock without exposing you to the risk of higher rates. These come at an additional cost.

We’re Here to Help

Timing and understanding are key when it comes to mortgage rate locks. We encourage our clients to talk to different lenders or brokers about their mortgage rate lock offerings, so they can get a good understanding of typical costs and terms. Contact Lucey Mortgage Corporation in in Mount Pleasant, SC, to learn more about our mortgage rate lock options, and ask any other questions you may have as you begin the homebuying process.

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Lucey Mortgage Corporation
861 Coleman Blvd
Mount Pleasant, SC 29464

Phone:
843-224-3650
EFax:
888-534-8868

Hours:
MON-THURS 8:30 AM - 5:00 PM
FRI by Appointment