lock in a loan rate to take time. For example, if you lock it in too early—you’ve found the right home—and the process takes longer than you planned for, you could easily miss out on a better rate, or end up paying more to extend the mortgage rate lock period. Remember, the longer you hold a rate lock, the more expensive it becomes. According to Bankrate.com, “a borrower who chooses a 30-day lock on a loan may pay a 4.875% rate and zero points, while a 60-day lock might cost 1 point (equal to 1% of the loan) or a slightly higher rate with a half-point.” Yet waiting isn’t always the best route to take. What do I mean by this? Some buyers “jump” on a low rate as soon as it becomes available (after home loan approval, of course), and this often works out to the advantage or favor of the buyer. Keep in mind that there is still the risk of having to pay for an extension if you don’t find the right home in time, but as mortgage rates are generally expected to rise, locking down a low rate as soon as you can could be a good idea, even with the risk. But you don’t necessarily want to rush. “Because of the fear of rising rates, many borrowers rush to lock in a rate as soon as possible,” Lisa Smith explains. “While this might seem to be a good strategy, it isn’t necessarily the best course of action in all situations.”
Step #7. Discuss with Your Lender
Talk to your chosen lender (bank or otherwise) and ask specific questions before you lock down a rate. First, make sure you know and understand your lender’s rules regarding mortgage rate locks. Different lenders will have different rules, and this could be one of the determining factors when you’re doing your home loan shopping. Be absolutely clear
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