When should I lock my Interest Rate

Locking your rate means committing to a specific loan program and structure at a specific interest rate for a specific period of time. As long as you close your loan before the expiration of that lock, we are committed to honoring the terms of that loan regardless of market activity. Rates can generally be locked anytime after the loan application has been made but no later than five business days before the scheduled closing date of your loan. Rates can be locked for varying periods of time.

Typical lock periods are 15, 30, 60, 90, 120, 150, and 180 days. As a general rule, the longer period of time you are locking in the loan for, the more expensive the loan will be either in terms of higher fees and/or a higher interest rate. Extended locks, typically used for new construction, often have some type of up front lock fee attached to them.

Rates are subject to change at anytime without notice and do tend to move up and down from day to day based on market activity so the big question everyone asks is "When is the best time to lock?"

The best time for you to lock depends on a couple of different variables including when you are scheduled to close on your loan, the affect a changing interest rate could have on your approval, and your tolerance for risk.

It is important to lock your loan for a period of time long enough to safely cover your closing date. In fact, we encourage you to lock for a period of time longer than your closing date in the event it is delayed for any reason. This is especially true with new construction. We typically recommend a lock that exceeds your expected closing date by 7-10 days.

We recommend that you think about and discuss with your loan officer what your lock strategy is going to be. Because an increase in rates will result in an increase in payment, you have to decide if the risk of waiting for a lower rate and having the rates go up is worth the reward of a lower payment if rates go down or ask your lender do they offer a float down on your lock. Most experts will tell you it is virtually impossible to time the market.

Because a shorter lock generally means a lower costs in a typical market where rates are not moving up or down significantly, a minor increase in rates will likely be offset by a shorter lock period. If rates stay the same or go down the shorter lock will also work in your favor, so the only risk in waiting to lock in for a shorter period of time is in an environment where rates go up dramatically. That is the environment where a bail out strategy makes sense.

Lenders are happy to share with you some historical data on rate movement and the rates and costs on various lock options so you can make a locking decision with confidence. Once your loan is locked the lender will send you a lock confirmation for your signature. That lock confirmation, signed by both parties, is their commitment to you to honor the lock and terms of the loan you locked and for the period of that lock.