Many people overlook the shopping aspect and tend to approach a single lender to avoid going through the “hassle” of looking for the best deal. As a result, these buyers could very well end up with their “dream” home, but it might come at a steep price, like a significantly higher monthly mortgage payment.
LOCKING IN A RATE
“Obtaining the lowest available interest rate on a mortgage should be every prospective homeowner’s objective,” says Lisa Smith from Investopedia. The reason is simple: Lower interest rates mean lower monthly mortgage payments, which can mean affordability in the short team, and lead to significant savings over the long term. It’s very important that you know when to lock in your mortgage rate. Mortgage rates change from day to day, and sometimes within the same day. “While advertising may have lured you in with an impressively low mortgage rate, that rate might not be available months from now when you close on your mortgage,” says Smith. The housing market is constantly changing, both up and down, and you don’t want to put yourself in the position of being at the whim of the market. You don’t want to miss out on a great rate, or cost yourself a lot of money down the road, should the market take a turn for the worse and you’re stuck paying a higher interest rate for a time, waiting and waiting for the market to settle and you can afford the rate again. If you’re concerned about the state of the market in your area, or worried that rates will climb even further before closing, your best bet is to lock in a mortgage rate, which is called a “mortgage rate lock.”
WHAT'S A MORTGAGE RATE LOCK?
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