When Can You Lock in a Mortgage Rate?

Financing a home without a mortgage is really difficult. It’s why many homebuyers take out mortgages. But, mortgage interest rates frequently fluctuate, even within an hour. Unfortunately, we cannot predict the fluctuations. That’s why many people choose a mortgage lock to prevent paying a higher interest before their loan is finalized.  

What Is a Mortgage Rate Lock? 

It is simply when a lender and a borrower agree to lock in the interest rate of a mortgage. Now, since loan rates keep fluctuating, a rate lock can potentially save a borrower from paying a high interest before their loan application is finalized. The lock freezes the interest rate so that you are assured that the specific rate you are offered will not change until closing. Rate locks usually last between thirty to sixty days. But they can go up to 120 days or more in some cases.  

How Does Mortgage Rate Locks Work?

Understanding the movements of the interest rates is crucial.  If they don’t change- mortgage rates can go up and down for weeks, then settle to the point they were when you were locking. In such a case, you may feel like you wasted your money paying for a rate lock. But remember that there’s no way to predict the market. Consider these locks as your peace of mind.  If they go up-this is the main reason for using a rate lock. Should the interest rates go up by the time you are finalizing your loan, you wouldn’t be affected as you have already locked in. If they go down– loan rates can also go down by the time you are closing, which is a significant drawback of locking your rates. If this happens, you’ll not enjoy the lower options, unless you have a float-down, which will qualify you for lower interest rates if they drop at the time you are closing.  

When Should You Lock in Your Mortgage Rate? 

If you are comfortable with the rates offered, it is best to lock in. But, it can be tempting to wait a bit and see whether the loan rates will drop. However, the market isn’t predictable, which can end up being disappointing.  A couple of things can influence your decision. If you want to refinance at a target rate, locking may not be a viable option unless the rates drop down to your specific target rate. But if you have a contract and a closing date, locking is a great option compared to waiting indefinitely for a lower rate. Remember that how long you lock affects the fee you’ll pay. For instance, you will pay less for locking for thirty days compared to a person who locks for 60 days.  

Should You Lock Your Mortgage Rate?

Locking is always a safer option, although it comes with a fee. It’s not easy to predict when and if the market will suit your specific needs. Therefore, it’s best to protect yourself from interest spikes. Learn more from your lender and their lock rate policy.

A Lending Hand for Financing Home Mortgages

Spire Financial (A Division of V.I.P. Mortgage, Inc.) brings lending expertise to you. All of our loan officers offer personalized communication for every client, guiding them through the process. We can show you ways to maximize your finances and unlock future opportunities. Spire Financial keeps you in control of refinancing, debt consolidation, and home equity. Together, we can achieve your financial goals.



V.I.P. Mortgage, Inc. DBA Spire Financial does Business in Accordance with Federal Fair Lending Laws. NMLS ID 145502. For state specific licensing, visit www.vipmtginc.com/national-licenses/. V.I.P. Mortgage, Inc. is not acting on behalf of or at the direction of the FHA/HUD or the Federal Government. This product or service has not been approved or endorsed by any governmental agency, and this offer is not being made by any agency of the government. V.I.P. Mortgage, Inc. is approved to participate in FHA programs but the products and services performed by V.I.P. Mortgage, Inc. are not coming directly from HUD or FHA. Information, rates, and programs are subject to change without notice. All products are subject to credit and property approval. Not all products are available in all states or for all loan amounts. Other restrictions may apply. This is not an offer to enter into an agreement. Not all customers will qualify.

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