How to Get the Right Mortgage Rate
Mortgage rates can be a very important expense, especially for first homebuyers who don't have a lot of extra money they can spend. When you do decide that you and your spouse are ready to get a home loan it is important that you consider the financial market and exactly what might happen to home loan rates. When you begin to work on getting a mortgage your interest rates fluctuate with the market and are never really exact until you decide to lock in an interest rate for your loan.
Locking your interest rate can sometimes be a gamble, but if it is done intelligently you can save a lot of money for the life of your loan. The bullets below give you a basic understanding of when the best time to lock in your mortgage rate.
When You Lock in Your Mortgage Rate:
- You lock your loan when the price of your loan is protected from changes that might occur in the market.
- The rate will represent the price, which was available to you when you specifically requested a transaction and the characteristics from your credit.
- You can lock your mortgage from usually 30 days up to a year in some cases.
- You are able to lock your rate anytime you find a property and 5 days after the date of your loan close.
- If you decide to "float status" you will most likely enquire an additional charge for the time spent.
What Does It Mean to Go Into a "Float Status?"
Locking your rate is when you decide that the current interest rate is the one that you want. However when you decide to float this is the opposite. Most of the time if you feel that the interest rates might go down in the near future, a float status is probably going to be much more effective. If you do decide to float you will be able to change you rate when you find a better interest rate down the road. When interest rates are extremely high most buyers choose to float because they can find the best rates in the future, verses the ones that they are dealing with now.
The NEA offers great information on when to lock and when to float.
