Locking in Your Interest Rate
When it is time to buy that perfect Denver home, locking in your interest rate is more than important. Interests fluctuate on a daily basis and it is has hard to determine whether the rate will increase or decrease. This is the number one reason why a buyer should take every opportunity to lock in an interest rate to prevent the rise of the rate in the future. A Denver real estate agent can help you to achieve this by recommending a top-notch loan officer to complete this task. Below, you will find the information that will benefit you in locking in your interest rate.
Defining Locking In Your Interest Rate
Locking in your interest rate is the loan officer's promise that while processing your application, they will lock-in your interest rate. This may take up to five days and during these five days, mortgage prices may change. It is normally the option of the buyer, whether or not they want to lock-in their rate or not. If you do choose to lock-in your rate, you may be charged an up-front fee that is not refundable upon canceling your application or not closing with the specific loan company. If your loan application is not approved, the lock-in fee is normally refunded. One downfall of locking in your interest rate is that you do take a chance of the interest rates decreasing and therefore you risk the option of a lower rate.
Unfortunately, there is no way to predict what the rate will do. In many cases locking in is the best option, however if you are willing to take the chance, you could indeed take advantage of a lower rate.
Advice for Locking In
Your Denver real estate agent is the best person to go for questions regarding loan officers and the process of qualifying. The agent will talk to you about the process of locking in and connect you with an appropriate loan officer who can handle your application. Lock-in times are available 30 or more days depending on what you and your loan officer decide. Most closings have some type of delay and you want to make sure that your lock-in time is long enough to cover these delays. Many times with a new home you will encounter a construction delay, this is what makes lock-in options so wonderful.
If for some reason your closing does not happen and your lock-in expires, you will more than likely lose the interest rate that is locked in. Many times this will be because the documentation that is required to close on the home is not received in a timely manner. If the rate does decrease after your lock-in expires, you will not be entitled to this lower rate and will be offered your previous locked-in rate.
It is recommended that you lock-in your interest rate. It is hard to determine what the rate will be in 30 to 90 days, but it can be a gamble and locking in the rate guarantees that you will receive the rate that you acquired in the beginning of the whole application process. As long as paperwork and approval is finished in sufficient time, a lock-in should flow smoothly. Interest rates are a big part of buying a home, therefore it is best to ask your Denver Realtor all the questions regarding rates when beginning the whole home buying process.
