Many people agonize over this decision because they just hate it when they lock and the rate goes down. There is simply no way to predict when rates hit bottom, but there are some things to consider:
• The longer the lock period the higher the points
• You can lock at the beginning, in the middle, or at the end of the loan process
• Mortgage rates change daily
First, rate locks can be for 60, 30, or 15 days. You have to choose a lock period that will cover the time it will take to close the loan. A 60 day lock will be priced higher than a 30 day lock, not in terms of the rate itself but in the points associated with that rate.
So, if you want to lock at the beginning of your transaction, you may need a 60 day lock which will be higher than if you wait until the middle of your transaction when you will need only a 30 day lock. That is, of course, if rates remain the same. You can also wait until the very end and take the remaining option of a 15 day lock, which will give you the lowest price in terms of points, but again you can only hope the interest rate stays at the same favorable level that it was at 45 days ago. But in the end, it may not matter very much. Let’s say you have a $200,000 loan and you locked in at 5.00% only to find out that rates went down to 4.75%. Sure that’s a .25% difference, but in dollar terms it represents only $30 a month, which may or may not be enough to bang your head over.
Best advice: select a rate and monthly payment you will be happy with, lock it when you can and don’t watch the rates from there…in the best interest of your peace of mind. At Honolulu HomeLoans, our Buyer Advantage Program can help. Buyers get a .25% discount in points which may help offset an interest rate drop after locking.We guarantee that we will be ready to close your purchase loan in 30 days of application, or we will credit you with $500 at closing!
(restrictions apply)
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Thank you all for your responses; if there’s any questions you have in particular please feel free to contact any of our Loan Officer’s
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