Going through the mortgage application process can be somewhat daunting, especially when you are trying to determine how to handle mortgage rates. The earliest opportunity to lock in a mortgage rate is directly after the initial loan approval. But is that the best or even the smartest time to do so?
Many experts will advise that all loans are unique and have different circumstances that might dictate certain behavior for different buyers. However, if you want to know the general rule of thumb, read on for a breakdown of mortgage rate lock advice:
It’s smart to jump on a good rate, but if you haven’t found a house yet then you may want to slow your roll. Because of the long mortgage application and approval process, many people start researching their loan prospects well in advance of finding a house. This is smart, but can also make locking in a mortgage rate even more difficult. Locking in a rate is all about timing, and if possible you should wait until you have a house in mind for purchase.
Let’s say you find a good rate and want to go ahead with locking it in. But then it takes longer than expected to find the right house. As time passes, you could be missing the opportunity for a better rate or end up paying extra to extend the lock. If this applies to you, remember that it can take weeks to find the right home and to have an offer accepted. The timing of your mortgage rate is almost as important as the rate itself.
The two most common lock rates come in 30 or 60 day increments. Longer rate locks are more expensive but can be helpful in unpredictable circumstances.
An important word of advice: don’t lock in your rate until you have a ratified contract with your lender as well as an approved offer on the home you want. When those two lights are green, you can pounce on the interest rate before it spikes.