When Is the Best Time to Lock Your Mortgage Rate?
If you’re in the process of buying a home or refinancing, one of the most important decisions you’ll make is when to lock your mortgage rate. Timing your rate lock right can potentially save you thousands of dollars over the life of your loan.
But with interest rates constantly shifting based on economic trends, inflation, and market volatility, it’s no surprise that many borrowers may feel unsure about when to commit.
What Is a Mortgage Rate Lock?
A mortgage rate lock is a lender’s commitment to hold your interest rate for a set period of time, typically 30, 45, or 60 days, while your loan is processed. This protects you from rising rates during that window, even if the market moves.
Rate locks can provide borrowers with peace of mind, especially in unpredictable markets. However, they also come with an expiration date, so choosing the right moment to lock in matters.
When Should You Lock Your Rate?
Here are a few key factors to consider:
- You’re Under Contract
- Once you’ve signed a purchase agreement, locking your rate becomes crucial. Most buyers lock their rate soon after going under contract to protect their monthly payment from increasing.
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Rates Are Trending Up
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If interest rates have been steadily climbing or are expected to rise due to economic forecasts or Federal Reserve decisions, it may be wise to lock sooner rather than later.
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You’re Comfortable with the Monthly Payment
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If you’ve found a rate that fits your budget and long-term financial plan, it may be a good time to secure it. Waiting for rates to drop slightly could backfire and end up costing you more.
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You’re Refinancing and Ready to Close
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For those refinancing, locking in your rate when your application is complete and you’re prepared to close ensures you won’t be caught off guard by any last-minute fluctuations.
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Should You Float or Lock?
Some borrowers may choose to “float” their rate, or delay locking in, hoping rates improve. While this can work in your favor if rates fall, it’s also risky, especially in a volatile market. If you choose to float, you may want to set a firm timeline or rate target with your loan officer.
Can You Extend a Lock?
Yes! Some lenders may offer extensions if your lock is set to expire before closing. However, extensions sometimes come with a fee or a slightly higher rate. It’s best to avoid delays and stay in close communication with your lender to keep the process on track.
How USB Can Help You Time It Right
At Union Savings Bank, our experienced loan officers guide you through every step of the home loan process, including the best time to lock your rate based on your personal timeline and market conditions. We’re committed to helping you secure a rate you feel confident in, without the stress.
Have questions about your mortgage rate?
Talk to a USB Loan Officer today and take the guesswork out of your home financing. Call us at 833-301-2505!