Locking in Your Mortgage May Be the Best Thing Right Now — Here’s Why

Advisor Written by: Dave Firestone September 11, 2019

Mortgage rates within North America continue to rise over the past few years, which is why it is not exactly that surprising when the new data by Realtor revealed that it gave such a massive impact on people’s interest in getting their homes.

It turns out that the monthly mortgage payment in North America has jumped to $223 a month or by more than 15 percent. The mortgage rates in the cities of New York as well as Seattle took the biggest hit of having more than $533-$545 increase. Mortgage experts then believe that this will most likely continue so those who are trying to qualify may want to do it as soon as they can instead of waiting and hoping for it to fall.
Then again as a borrower, you’ll have the opportunity to lock your mortgage if ever you think it would save you money. This of course wouldn’t be possible until after your initial loan approval.

The state that has the highest monthly mortgage rate in the United States is New York.

What Is A Mortgage Lock?

Most people think that this is actually the best thing they could do in order to save more money, some of them don’t even understand how this lock really works and if it would really benefit them. Basically, your lender would be able to guarantee that the mortgage rate that is being offered to you as their borrower will remain the same for a certain amount of time. This is known to be the mortgage rate lock that technically freezes the interest rate even if it goes up or down.

This then means that if you lock in your mortgage, you as a borrower would no longer have to worry about the rates rising.
Keep in mind that this usually lasts for about a month or two, but there are also some who extends it, but expect the fee to be more pricey. There are some lenders who give mortgage rate lock for free but of course if would be for a more limited amount of time.

Most people wait until they find a home to buy before locking because they believe that if they lock in way too early then it would expire earlier than they want it to and would spend more for extensions. If ever that happens, it means locking in may no longer be ideal for you, since a 60-day lock on a loan will definitely cost more than the 30-day lock.

Locking your mortgage doesn’t always mean you’ll save up more, it would always depend on the kind of plan that you have.

To Float Or Lock Your Mortgage

People then often get confused on which would be more ideal for them, locking on floating. If the rates on the interests rise when a borrower closes on their mortgage, then they will most likely lose buying power, however, if they do it when the rates fall, they will earn some. This is now what they refer to as floating mortgage.

Experts believe that during this time when the rates keep on going up, the best possible way to do is to lock it instead of floating it, but only if you are certain that by the time you are near your anticipated closing date, it would still be up. However, if the rates on mortgages are on the opposite direction going downwards instead of up, then it is ideal for a borrower to float it until you are getting near your closing date.

That is because if the rates continue to go down, the borrower will most likely get a better rate.

Experts believe that mortgage rates will continue to rise the next few years and it will have a bigger impact on the buying power from the public.

It is such an important thing to consider how the rates are changing before you make a decision, since it would definitely affect the mortgage you pay every month. Discussing the lock or float terms with your lender will be able to help you out as well, then again, being knowledgeable when it comes to these matters would help you even more. Being gullible when it comes to these types of things is simply not