Lock in an interest rate for a home loan
It is important to lock in your interest rate at the correct time. Good timing on an interest rate lock can save you thousands of dollars. Interest rates change daily so the longer a lender locks in a rate, the more risk that they have the market will move against them. Therefore you will have to pay extra to have a lender lock in a rate for a longer period of time.
Still wondering what it means to lock in an interest rate? When you lock an interest rate you are guaranteed to get that rate no matter how the market performs. If you lock an interest rate in today that’s good for 45 days then no matter how much interest rates rise you are still guaranteed the lower rate.
It would be a good idea to lock in interest rates if the trend in interest rates is rising. This will give the lender time to close the loan without worrying about rising rates. If the trend is down you would want to float your interest rate to take advantage of falling interest rates.
Finding the right time to lock a rate is a game. Even in a stable market it’s a risk to not lock a rate. Because of the highly volitle market interest rates can rise drastically even in the course of a day. Paying the lock fee will ensure you have ample time to close the loan and not have to worry about a drastic rise in interest rates.