Locking Rates

There comes a time in the loan process when you have to decide when to lock your interest rate. Most loan companies will lock your interest rate free for 60 days. Some people like to wait to lock in that rate in hopes that they can “time the market” and get the lowest interest rate possible. Instead of fixing a rate that is affordable, they try to score even lower rate.

This is risky because anything can happen that will trigger a rise in interest rates, such as a local or international event. Loan officers are not in the position to call all their clients who have not locked if something suddenly happens. Trying to hit the bottom of interest rates is like trying to time the stock market – it is very hard to do.

I always recommend to my clients to lock the rate once you are within 60 days of closing or less. You want at least a week leeway in case closing is delayed. This is a win-win situation for the borrower. If rates go up, you win by having an affordable mortgage payment. If they go down, you can either negotiate to get a lower rate or refinance later.

Wouldn’t you rather make your decision to lock now rather than risk being forced to accept a higher rate than you are uncomfortable with? Once you lock you no longer have to worry about what your payment will be. In addition, you can not get final loan approval with out your rate locked. Once you have complete loan approval and a rate locked that you want, you are ready to go forward and move to closing.

- Sharon J. Coleman

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