Securing a good mortgage rate can be as crucial as finding the perfect home. A mortgage rate lock is a lender's promise to hold a certain interest rate and a specific number of points for you, usually for a span between loan approval and closing. This period can protect you against rate increases during your home buying process, offering peace of mind as you move forward.

What is a mortgage rate lock?

A mortgage rate lock is a commitment from a lender to maintain the interest rate on your loan for a set period. There might be an additional fee or the cost could be included in the loan. Typically, the lock spans from initial approval through processing, underwriting, and closing. Once locked, your loan's interest rate remains unchanged, regardless of economic fluctuations, unless there are alterations to your application details. This shields you from higher rates but doesn't allow for a lower rate unless you have a one-time "float down" option.

Rate locks can be invalidated if there are changes to your application information, such as property appraisal, credit score, income, or employment, or if there are revisions to the loan terms, such as its duration or type.

When Should I Lock In My Interest Rate?

Deciding when to lock in your interest rate is a strategic decision. In Seattle's competitive real estate environment, timing is everything. The ideal time to secure your rate is after your offer on a home is accepted and you have a clear understanding of your closing timeline. However, market conditions, interest rate forecasts, and your personal financial situation can all influence this decision.

The Benefits of a Mortgage Rate Lock

  • Stability: Locking in your rate provides financial predictability amid fluctuating interest rates.

  • Savings: If interest rates rise after you lock in your rate, you'll save money on interest over the life of your loan.

  • Strategy: A rate lock can be a strategic tool in your home-buying arsenal, especially in a market as competitive as Seattle's.

Remember, mortgage rate locks come with a specific time frame, often 30 to 60 days. Extending a lock comes with fees, so it's important to have a realistic closing date in mind.