When Do I Lock In My Mortgage Rate?

By Eric Goodwill

Optimizing your mortgage rate will depend on rate fluctuation nd locking in your desired interest rate. What factors affect this decision?

Mortgage interest rates have an important economic influence on home loans over the life of the loan. You have found your dream house. Now you are securing the home loan and working toward closure of your purchase. You wonder, “When Do I Lock in My Mortgage Rate?” Mortgage interest rate changes may have an important monetary effect depending on when you locked in your rate.

Rate Fluctuations

The mortgage interest rates fluctuate constantly. When rates are low, buyers may choose not to lock into a rate until just before closing hoping for the lowest interest rate possible. A buyer who has studied interest trends and knowledge of economic conditions may decide to lock in at the last possible opportunity to secure a low interest rate.
Buyers without extensive knowledge of interest rate fluctuations should depend on the advice of their knowledgeable lender to explain the pros and cons of waiting or locking into an interest rate.

Locking Interest Rates

During the purchase process of a home, buyers have the opportunity to lock into a mortgage rate based on the rate for the time they choose lock in. This mortgage rate lock is helpful because some closings may take weeks to process, and during this time rates may increase to higher interest rates.
Most buyers choose to lock into a rate on a fixed interest mortgage so their monthly payments are the same for the life of the loan. If the interest rate goes up or down, this fluctuation will have no bearing on the sale closure because the interest rate is already set for the loan. The obvious risk is that at closing interest rates could have decreased substantially and the lender will have the option to offer your loan at the locked in price or the lower interest rate.

When Do I Lock In My Mortgage Rate?

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