“Locking in an interest rate.”
What does that mean, and how and when does that happen?
Locking in a rate means we’re guaranteeing a certain interest rate for a certain period of time. A lock is guaranteed as long as your loan closes and funds before your interest rate expires. As a result, we generally recommend we lock an interest rate longer than we need for closing.
Typical rate locks are for intervals like 15, 30 or 45 days (though we can even lock for 60 or 90 days). If everything stayed the same all the time, shorter lock periods would provide better interest rates. But things rarely stay the same.
Rates can move on daily basis. Up, down—there’s a lot of volatility in the market, and all these factors can change every day. If a rate moves down by the time we’re ready to order your loan documents, we can actually float down your interest rate to lower rate.
Because of that, we’re big advocates for locking in a rate at contract. We’ll protect you from higher rates while also allowing us to take advantage of lower rates while you’re shopping.
If you have any questions on interest rate locks, contact us today.