Consider the following three things when deciding whether or not to lock in your mortgage interest rate:
- Lock in your rate as soon as you know you have a good deal in front of you, and you know roughly when you can close (30 to 60 days should be the longest lock period).
- Lock it in with a lender who has the option of a “float down” if possible. If rates get better, you can participate in a portion of that improvement.
- Lock it in with a lender who has a liberal rate-lock extension policy. No rate-lock extensions are free. Some even expire beyond the ability to extend. Make sure, whenever possible, that you work with a lender who will allow you to extend your lock if for some reason your deal takes a little longer to close than anticipated.
- Don’t think about it very long. The rates go up a whole bunch faster than they come down. If the above is to your liking, lock!
No one can time the market. If I get one question more than any other these days it’s “what is going to happen in the next few months with interest rates?”
No one knows – plain and simple. If anyone tells you what will happen to interest rates in the future, consider not working with them – they think they know things they could not possibly know.
We do know what moves rates. We can even know anecdotally (after the fact) what did move rates. But then, we also know who won the Super Bowl – on Monday morning. We even know why, almost exactly why.
But, we never know what will happen to them.
Lock in your interest rate with the above options as soon as you are able to.