Rate Locks in a Quickly-Changing Housing Market
Ever hear the old saying, "Timing is everything"?
Does that sound familiar?
It should, as that description pretty much fits the majority of housing markets found across the U.S. (as of this writing). There’s definitely been a move in the upward direction.
Home prices have been on the rise in most areas. Interest rates have done likewise. Given those two facts, rate locks have become a focal point for many of my clients.
Why? Ticks up and down in each translate to higher or lower costs in financing and monthly payments. So the attention and interest in interest rates are deserved.
Every detail and aspect of rate locks are always thoroughly discussed with all my borrowers. However, I want to share and point out the following information and bullet points regarding locks, as I believe they demand special attention and are noteworthy.
Regarding rate locks:
- PRIOR TO SHOPPING FOR A HOME: Discuss interest rates with your lender. Ask if you can secure and lock a rate while “shopping for a home”
- Pre-Approval Letters DO NOT GUARANTEE a borrower that interest rates will remain the same throughout the viewing and negotiating of a contract
- Extended rate locks exist, BUT they're not offered by all lenders
- Extended locks exist for 75 and 90-day in LIMITED scenarios. Again, let me reiterate: Only SOME lenders offer options to lock WHILE a home search is being conducted
- If New Construction: Buyers can “possibly” secure a rate lock for the entire build-out, but to help offset the risk of possible rate increases, SOME COSTS are typically charged
- Home Buyers and those Refinancing: Weigh all the options available to you
- Don't compare your financing scenario with another's. Every borrower and their scenario (finances, contract, needs, term, credit history, credit scores, etc.) is different
- Timing IS everything when borrowing ... and time IS of the essence. That's especially true now in this challenging and swiftly moving housing market.
- Remember to act and respond to requests made by your lender (and agent) in a timely fashion, as it can matter greatly and cost you $$$ if you don't.
- Lenders are not "cookie-cutter". Great differences exist between loan officers.
Those differences are revealed in the loan programs and loan options they have available, the interest rates they offer, the experience they have accumulated, and the knowledge they hold.
Find the best available loan officer for your needs and then do not move further forward until you thoroughly understand all your options and the details, requirements, and benefits of each.
Want to know more? Contact me …
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