5 facts about rate locks that Portlanders need to know.
Everyone loves to save money. A rate lock is one way you can protect yourself against projected mortgage rate increases and save on interest expenses.
Since the Federal Reserve has indicated it plans to raise rates at least once during 2022, it’s smart for potential homebuyers to learn how rate locks work. This article provides a general overview, but you should always talk to a lending professional for advice related to your individual needs.
So, what is a rate lock? It is a commitment from a mortgage lender that they will charge the borrower an agreed-upon interest rate if the home loan closes before the end of the lock period.*
If you have questions about rate locks — or any other aspect of a home loan —reach out to us today. We’re here for you!
Disclaimers:
*Pricing for long-term rate locks are based on Day pricing with specific add-ons determined by the lock term chosen. Float down option is based on current pricing plus a float down fee. Terms and conditions apply. Talk with your Loan Officer for details.
Since the Federal Reserve has indicated it plans to raise rates at least once during 2022, it’s smart for potential homebuyers to learn how rate locks work. This article provides a general overview, but you should always talk to a lending professional for advice related to your individual needs.
So, what is a rate lock? It is a commitment from a mortgage lender that they will charge the borrower an agreed-upon interest rate if the home loan closes before the end of the lock period.*
Beyond the basics
The concept of a rate lock is fairly straightforward — you’re guaranteed a specific interest rate for your mortgage if the loan closes ¬within a certain timeframe even if rates go up. However, there are some details that may not be as obvious:- In most cases, a rate lock can be as short as 14 days or as long as 60 days. That being said, other options may be available. Ask your lender for details.
- A rate lock is finalized after the application has been accepted, but before the underwriting team thoroughly reviews your credit history, income, property appraisal, and other details.
- Rate locks can be a smart tool when interest rates are exceptionally low and/or expected to increase. (The cost of a rate lock varies by lender, so always verify before making a final decision.)
- You may have the option of a lock extension if your loan doesn’t close before the lock expires. If you believe an extension would be helpful in your situation, ask your loan officer for more information.
- If you’re concerned about rates dropping, you may want to consider a “float down” option. This feature would allow you to take advantage of a lower rate, while remaining protected against rate increases. Ask your loan officer for more information.
Is a rate lock right for you?
Although we can’t predict the future, nearly everyone in the real estate industry expects rates to go up in 2022 and we want to help you be an informed, savvy consumer.If you have questions about rate locks — or any other aspect of a home loan —reach out to us today. We’re here for you!
Disclaimers:
*Pricing for long-term rate locks are based on Day pricing with specific add-ons determined by the lock term chosen. Float down option is based on current pricing plus a float down fee. Terms and conditions apply. Talk with your Loan Officer for details.