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Refinance Purchase Home Equity

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What If I Decide Not To Lock In A Mortgage Rate and Rates Increase?

By Jim Micheals

What if I decide not to lock into a mortgage rate and rates increase? If rates increase can I refinance at a lower rate? Is there a difference in payment?

If you are not locked in to your current mortgage rate there is a chance that rates will go up and you will pay more for your mortgage. While mortgage rates have been dropping over the last few years this is a trend that is not likely to continue forever. If you are offered a good rate when you apply for a mortgage you should try your best to lock into that rate. If mortgage rates drop enough to make a difference you can always refinance at that time. Variable rate mortgages can skyrocket at any given time and you will be stuck with a payment you can not afford and pay much more throughout the life of your loan.

If rates increase can I refinance at a lower rate?

When you refinance you will do so at the current rate. If that rate is higher than what you are currently paying you will now pay the higher amount. Refinancing will not be done at any former rates. Mortgages are based on the current interest amounts only.

If my interest rate increases will my payment be different?

If you have a variable rate mortgage your monthly payment will be based on the interest rate that you are currently paying that month. This is where so many problems arose in the mortgage industry. One month your payment could be $1000.00 based on that month’s interest rate and the next it could be $1500.00. If at all possible you should always lock into an interest rate at the time you apply for a mortgage. If you are in a variable rate mortgage and in good standing you may wish to consider refinancing the loan.

Related posts:

1. Is It Legal For A Fixed Mortgage Rate To Increase?
2. Should I Lock In My Loan Rate When I Apply For My Mortgage Loan?
3. When Is The Best Time To Lock In A Mortgage Rate?
4. Should I Lock In A Mortgage Interest Rate?
5. When Can I Lock The Interest Rate On My Mortgage Loan?