Locking in Current Mortgage Rates

With current mortgage rates so low, you might be wondering when to lock in the mortgage rate on your loan.

Getting a mortgage can take 30, 60, or even 90 days, particularly if you’re buying a home. Mortgage rates can change daily during that time. What you’re trying to do is lock in the lowest mortgage rate possible during that time.

Getting the best mortgage rate
Locking in a mortgage rate means the lender agrees that is the rate you will be charged on your mortgage, even if rates go up before the loan closes. In this case, the “pro” is that you are protected from any increase in the current mortgage rates. On the flip side, you will not benefit from a drop in the mortgage rate.

When you lock in current mortgage rates, you also can lock in terms such as any points or fees you will pay. Another option is to lock in your rate but leave the terms flexible.

How to track current mortgage rates
You can find current mortgage rates online at sites like LendingTree.com. Freddie Mac, which buys mortgages and resells them to investors, also lists current mortgage rates on its Web site, www.freddiemac.com. Your lender’s mortgage rates might be higher or lower on any given day. The Freddie Mac survey is updated weekly.

You will want to pay attention to the mortgage market, but try not to obsess over current rates. Think about the big picture. Current rates are so low that you will still get a great deal even if the rate goes up a few hundredths of a percentage point before you lock in.

Your mortgage lender will be tracking mortgage interest rates as well in an effort to help you lock in at the best possible time. The lender will suggest a good time to lock in, but the decision is up to you.

If you lock in your mortgage rate
Be sure you get confirmation of the locked-in interest rate in writing from your lender. Some lenders will charge a fee to lock in the mortgage rate. Make sure you understand how the process works with your lender before signing or agreeing to anything.

You will need to close on the mortgage before the lock-in period ends to take advantage of the lowest current mortgage rate. Lock-in periods of 30 to 60 days are typical, but they can be as long as 120 days.

Be aware that the low interest rates and the federal mortgage rescue plan have overwhelmed many mortgage lenders. That means it might take longer than usual to close on your loan or mortgage refinance.

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