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Interest Rate Lock Options

Is your rate locked in or floating?

When shopping and getting pre-qualified for a new mortgage, your interest rate is a very important component. A buyer’s interest rate will determine how much home they can afford and how much the monthly obligation will be. In most cases to lock in an interest rate you have to be in contract on a home. Below will review some locking options available for buyers.

The great news – There is protection for buyers looking to purchase a home who have not found one yet. Some lenders offer programs to buyers who will be purchasing with 5%-20%- or more down. There are many loan programs to choose from with fixed rates as well as adjustable rate mortgages. This lock in protection allows up to 60 days to locate a home. This means you lock in at the time of application for 30 days. You have 30 days to find a home and have a fully executed purchase contract. At the end of the 30 days your lock is extended for 30 or 45 days in order to close the loan. If interest rates have gone lower the lender may give you the lower interest rate. This float-down option is another wonderful benefit of this program.

For clients who do not wish to put 5% down or who can not meet the credit score of 620 there are options also available. In many cases A- lenders will not allow a buyer to lock in the interest rate until the time of closing. Although most A- lenders do not change interest rates as often as Conventional lenders, rates still may change, which can affect your buying power. There are a few select lenders who will lock the rate in at time of credit approval for 60 days. The buyer will have credit approval, with a locked in rate and must find a home and close on the home within 60 days.

When interest rates increase, it seems as though it is overnight. The market changes and day after day, buyers watch rates increase. The lock protection programs are here for those who need this option. This is just one more way a select few of lenders are helping buyers achieve the American Dream of homeownership. If you are unsure whether you will qualify for the home of your dreams when interest rates increase, call me today to protect your future and buying power.