This is an excellent question with no easy and foolproof answer. Much like gambling, locking an interest rate can be a roll of the dice, but here are some helpful hints for locking in the best Atlanta mortgage rate before you buy.
Lock Sooner than Later
Interest rates have been at close to historic lows as of late, but the overall market sentiment is that these rates will not last forever. As a matter of fact, the most recent trends indicate an increase in interest rates over the last several weeks.
Depending on where you are in the homebuying process, you may want to consider a 30-day or 60-day lock. The upside on a 30-day lock is that you will pay a lower fee to lock the loan. The downside however, is if you do not close within that 30-day period, your lock will expire and you will have to reset it at the new current rate.
How Do You Pay for a Loan Lock?
You could potentially pay as much as one-half point for a 30-day lock and a full point for a 60-day lock. This is not an upfront expense, but rather is included in your closing costs. This way, if for whatever reason, the contract falls through on your home and you do not close, you will not have to pay the fee for the lock.
If you do not want to pay for the lock at closing in the form of points, you can have the mortgage lender calculate it into the interest rate to avoid additional out-of-pocket expenses at the closing table.
What Happens if Rates Go Lower After a Lock
Once you have locked your rate, you have committed to it. With that said, many lenders will offer a program called a “Mortgage Rate Lock Float Down”, that will allow you to exchange the Atlanta mortgage rate you locked in with one lower if rates fell once you locked. There is typically an additional fee involved in committing to a float-down so make sure the fee will actually offset the savings in the event you opt to go this route.
Many people like to wait until they have ratified their home purchase contract before locking to ensure they have time to adequately find a home and submit a purchase contract before the clock starts ticking.
If you’re just beginning your house hunting process and are interested in speaking with one of our Atlanta mortgage lenders about the loans we offer, simply fill out our Fast Response form or give us a call in our local branch office located at (770) 226-5800. Our experienced mortgage professionals would love to sit down and discuss your needs. We look forward to serving you!