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Is Locking Your Mortgage A Good Idea?

Nov 28, 2007
Wouldn't it be nice if we could predict the future? Especially when it comes to finances? There are many myths about how interest rates and stocks are affected by everything from winning football teams, birthdays of presidents and even the weather. Whether or not you can really rely on these sources is up to you but it would come in handy when deciding on all our investments! When it comes to looking for a loan, one frequent question is whether or not you should lock your rate. When you lock a rate, that means that you set the interest rate that a lender is currently offering you. Rates are constantly rising and falling, so sometimes locking a rate may be a good choice or a bad choice. There are two sides to everything and pros and cons of both options.

When looking at locking your rate, normally your first instinct is to go ahead and lock it. It may not be a bad thing if the lender is offering you excellent rates. Loan officers are always working to offer you the best rates. Most of the time the mortgage will not close for another month to two months and so giving you the option to keep the rates that they offer you at the time seems like a nice solution. If you are offered an excellent rate, lock it. It is that simple. But if you think that you can find something better then the next question to ask yourself is whether or not you are a risk taker.

Being a risk-taker may come with a negative connotation but it may be your best option. By not locking down your rates, it just means that you are willing to see if the rates will change and hopefully lower. If you have noticed that rates have recently been lowering, you should probably feel pretty safe not locking down for a while. They will probably stay in that pattern but then again, there in no guarantee. You may decide to not lock and then watch the rates rise for the next 30 to 60 days.

When you lock into a certain interest rate that means that you are agreeing to a specific rate. It is considered a promise, a contract, or a deal. You could never ask the loan officer to change his side of the agreement if the rates increase, so you should not expect a change if the rates decrease. When it comes to financial matters, it is never a bad thing to have open communication with your loan officer. Check out all of your options if you are not feeling comfortable with the rates that your loan officer is giving you.

Dont forget that if you decide to not lock your rate, it doesnt mean that you have to wait until the mortgage closes to lock your rate. If after a week of waiting, you see a rate that you do no want to pass up, get in contact with your loan officer and then lock your rate. There are always lots of options available, so just try to find the one that best fits you.
About the Author
Court provides information about qualifying forbad credit auto loans and helps people effectively work from home.
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