Local Records Office – Olympia, WA: What is a Rate Lock? A rate lock is simply an agreement between a borrower and a lender. Deciding if you should lock in your mortgage rate is often a question many homebuyers lose sleep over, says Local Records Office. No one wants to make the wrong decision. You don’t want to wait and see rate increase, but what if you lock and rates decrease? This is where most homeowners get confused, most people are not quite sure when to do it, or if you should any way. To help with your decision, below is a list of nine items you have to know about rate locks in Olympia, WA.
- Mortgage rates rise if your Federal Reserve increases rates, so keep an eye on this.
- Be aware that rates do have an expiration date. If you can don’t try to do it too early, you can always be forced to file for a good extension, which typically increases the rate.
- A float-down option may be acquire to be added to any lock agreement. This gives you the opportunity to grab a lower rate whenever they drop more after you based one in says, Local Records Office. These are certainly not free, but if the market is really fluctuating down and up it could be in your best interest to add this provision.
- If rates go down, you can’t just abandon your locked rate and start over without expecting to pay a fee.
- Local Records Office says, “Rate locks are certainly not final”, they usually last anywhere from a month or more to 60 days. Shorter lock periods are less pricey. You can get one for a longer time lock (90 days, for example), even so the rate and fee will become higher. In most cases you don’t want to lock a rate in before you are set on a home.
- Not all fees for rate locks are made equal. It can be a flat rate, but it may also be a percentage of the total amount of the mortgage.
- Mortgage rate locks are agreements made out of lenders, not brokers.
- In the event you wait too long to fasten yours in – hoping rates should go back down – you could end up losing your dream home if the current rate puts your debt-to-income ratio too high.
- Rate locks for 45 days are generally the most common option in Olympia, WA says, Local Records Office.
Mortgage rates are often compared to gas prices because you can watch them creep down slowly every day and then suddenly, they jump back up once again. Of course, the day they increased was the day you were going to fuel up your tank. Rates can be unpredictable but if rates locally have remained consistent for a period, then a lock rate most likely are not important to you; but if the rates have been in all places, a locked rate will offer peace-of-mind during what generally is a stressful process.