Mortgage Interest Rate Lock
High home prices, rising mortgage interest rates – all sound too familiar by now. If you are in the market to buy a house, consider locking in your mortgage interest rate so you don't have to worry about rising interest rates and unpredictable loan costs. Learn everything you need to know about mortgage rate lock, when to lock in your mortgage rate, and how to do it.
Mortgage Interest Rate Basics
When buying a house, it is important to know how much you will end up paying on mortgage interest rate. Your monthly mortgage payment is made up of principal, interest, and (usually) property tax and homeowners’ insurance. The principal is the money you borrow. The interest is the fee charged to borrow that money. The interest rate is a percentage of the principal and has a major impact on the amount you will pay over the life of your loan.
Interest rate lock basics
What’s a mortgage interest rate lock?
A mortgage interest rate lock is when you ask your loan originator to lock in your rate when buying a house. Your rate is then set for your loan, as long as you close on time. It won’t change during your loan term if you choose a fixed-rate loan. Locking in your interest rate is an important step in your home loan process.
How long can I lock in a mortgage rate?
Your mortgage rate lock period will be for a specific length of time, usually from 30 to 90 days, to allow time for your loan to be approved and, if you’re buying a home, for your purchase contract to be finally approved by both you and the seller. There are extended rate lock options for construction loans.
When can I lock in my mortgage interest rate?
You can lock in your mortgage rate as soon as you complete your loan application and select a mortgage. Or you can wait until a few days before closing. The choice is yours, but there are pros and cons:
- Locking in your rate early means you won’t have to worry about rising mortgage rates. You’ll have peace of mind knowing you’ve made your decision. If rates drop before you close, you’ll be locked into a higher rate, unless you’ve taken a float down (explained below). However, you can always refinance your loan in the future if rates fall enough to make it worthwhile.
- Locking in your rate later means you’ll see how rates are trending, and possibly lock at a lower rate. You need to be comfortable taking the risk that rates might rise, but waiting could pay off.
No matter when you want to lock, discuss your preferences with your loan officer.
How to lock in your mortgage rate?
Your loan officer locks in your rate when you tell them to. Rates change constantly, even in the course of a day, so it’s important to have a knowledgeable advisor keeping an eye on them. Your loan officer will watch the rate trends for the kind of mortgage selected, and let you know if it looks like a good time to lock in your mortgage interest rate.
You could decide to lock because it appears that rates are rising, or staying steady, or have dropped and aren’t expected to fall further. There may be longer-range signals, like economic reports, international events, or actions by the Federal Reserve. Influences on mortgage interest rates are many and complex, so having a trusted expert will help you make the decision that’s right for you.
What if rates go down before my closing?
If rates fall after you’ve locked, and you’re still within the lock period, you’ll probably have to pay the rate you locked. If your rate lock expires, you’ll need to discuss the options for a new lock with your loan officer. Talking to your loan officer is the best course of action whenever you have questions about your loan.
What can void a rate lock?
As long as the information on your loan application stays the same once you’ve locked in your rate, the lock will stand. However, if you change loan programs (from conventional to FHA, for example), or your income or employer changes, or your credit score drops, your rate lock may not be valid. For that reason alone, you’ll want to keep everything the same until after your loan closes. More importantly, your loan could be canceled by your mortgage lender if you make changes that affect your creditworthiness.
Mortgage rate lock program options
In addition to a standard rate lock as part of your loan process, CrossCountry Mortgage has some special programs that may help you. Ask your loan officer for more information.
CCM Lock Before You Look
What if you could lock in your mortgage loan before you found the house you want to buy? You can!
CCM’s Lock Before You Look program allows you to lock in your mortgage interest rate up front by following these four simple steps:
- Apply for your mortgage loan, get fully credit-approved
- Lock your rate for up to 90 days
- Shop for your home
- Once your offer is accepted, you’ll be ready for a fast closing
Extended rate lock for new construction
When you decide to build a home, you want some certainty in the process. Building takes a long time, and rising interest rates could make your dream home unaffordable. Use CCM’s extended rate lock program to lock in your mortgage rate for up to 12 months.
CrossCountry Mortgage, LLC cannot guarantee that an applicant will be approved or that a closing can occur within a specific timeframe. All closing timeframes may vary based on all involved parties' level of participation at any stage of the loan process.