It’s no secret that mortgage rates are constantly fluctuating. This can be tricky for home buyers who are waiting to buy until they can secure the lowest possible rates. You may be watching the numbers go up and down by a few hundredths of a percentage point here and there, but this does little good for borrowers and instead usually invites headache and indecision. The best way to move ahead with the buying process is to simply lock in a rate – just go for it!
The easiest way to enhance your rate-lock confidence is to focus on the date on which you will be closing. If you’re closing in 30 days, you will want to lock in your rate for 45 days. The longer your rate is locked, the more expensive the loan will end up being due to lender risk. Many lenders won’t lock your rate for less than thirty days unless you’re immediately ready to close. Some lenders will extend the rate for you if you can’t close by the end of the lock, but you will need to double check to see if your lender abides by that policy.
If you’re still concerned about receiving a good rate, you can estimate where the rates are heading by checking the 10-year bond prices. It’s very common that increased 10-year bond prices are often correlated to decreased interest rates. You can also look into buying discount points (one percent of the loan amount is equal to one point) to buy your rate down. Buying discount points can be unhelpful if you don’t plan to own your home for several years, so contact us if you want to know if it could help you or just take money from your pocket in the long run.