Should You Lock In A California Mortgage Rate?  

One of the chief concerns of borrowers taking out a mortgage is interest rate changes. Depending on the circumstances locally, nationally, and internationally, interest rates can change over the course of a day.

There’s no reason for you to worry about your rate increasing while you wait for your closing date – instead, speak to your lender about a mortgage rate lock. Your lender will come up with an agreement that makes sure that rate is available to you for a certain period of time, with some exceptions. Typical time periods for a rate lock are 30 days, 60 days, and sometimes 120 days. The caveat to this is the longer your rate lock period, the more you’re typically charged in fees.

However, there are some things to be aware of when considering a rate lock:

Don’t lock too early.

If you lock in your rate for 30 days at initial approval and then don’t make an offer on a home for another two weeks, your rate lock will expire before your closing, and you’ve lost your guarantee. It’s advisable to wait to lock your rate until you’ve found a home.

Understand all of the terms.

Make sure you know whether your rate will be susceptible to changes stipulated in your agreement, and what fees you can expect. The longer your lock term, the more you’ll end up paying in additional costs.

Make sure you’re not missing out on lower rates.

A problem with locking your rate is that if rates drop during that period, you won’t be able to take advantage of them. Speak with your lender about a one-time rate drop option should things change during your lock period.

About the Author

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