What does it mean to lock in a rate on a mortgage loan? Think of it like putting it on ice: it freezes the rate. 

Why should I care about locking in a rate?

Locked rates can give people peace of mind. You don’t have to worry and wonder if the rates will go up. This is especially important during a time in which rates fluctuate. Generally speaking, interest rates change daily but they can change several times during the day depending on what the market is doing. 

Depending on the market, we have seen swings of ½ to ¾ of a percent in a day. That might not sound like a lot but it can add up to thousands of dollars in interest you’d pay on your mortgage. And, it affects what your monthly mortgage payment is. It’s a lot easier to estimate and anticipate that monthly payment when you know exactly what your mortgage rate will be.

How do I secure a rate lock? 

Talk to your mortgage loan officer. Your loan officer will discuss the length of the lock you need with you. Generally, the shorter the lock time the lower the rate. Right now appraisers are inundated with orders so it may be in your best interest to wait to lock or do a longer lock to ensure there is enough time allotted for a home appraisal, underwriting and to secure all the proper documentation. 

Rate locks have expiration dates so you’ll want to make sure you get the documents requested from you to your lender quickly. In most cases you can extend a rate lock, but extension fees will cost you more money. 

When should I secure my rate lock?

With most lenders you must have a pre-approved application submitted and a property address in order to lock in a rate. Once the rate is locked the clock starts ticking to keep everyone on task to get your mortgage loan to the closing table. Communication with your mortgage lender is always a good thing, your lender can advise you on the interest rates. Ultimately, it is up to you when you want to lock in your rate. 

If you have questions about locking in a rate or the mortgage options available with ICB, please reach out to me at jwery@icbk.com or contact any member of our mortgage team.

Written by Jason Wery

Vice President - Retail Banking, NMLS ID 426412

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