When Does It Make Sense to Lock in a Mortgage Rate?

Team Simplist
When Does It Make Sense to Lock in a Mortgage Rate?
Oct 19, 2021

Wowed by those low mortgage rates? Find out when it’s time to lock it in for long-term savings.

With the mortgage markets experiencing some of the lowest rates in history these past couple of years, home buyers have struggled with a new set of questions: How low is low enough? What if tomorrow’s rate is better than today’s? If I don’t lock in my rate, will it go up or down before the closing? It’s anxiety-inducing just thinking about it—we get it.

Locking in your mortgage rate provides the predictability you’re looking for, but it can be hard to determine the ideal time to lock. While you can’t predict the fluctuations of the financial markets, you can lock in your rate at a time that’s most favorable for your individual purchase process. In addition, you can take advantage of some strategies to preserve your options even after you’ve locked your rate.

What is a mortgage rate lock?

As the name suggests, during the period of your rate lock, your mortgage interest rate won’t change, even if interest rates oscillate. That offers you extra security during the purchase process and the reassurance of knowing that your favorable rate will still be available when you are clear to close.

A mortgage rate lock is provided by your lender for a limited amount of time during your mortgage application process. In many cases, lenders charge a fee to lock your rate, but with Simplist, you’ll never have to pay to lock in your rate.

How long does a mortgage rate lock last?

The duration of a mortgage rate lock tends to vary, with 30, 45, and 60-day terms being the most common. Longer rate locks may be offered for new construction loans, and during times of high volatility and high demand, in order to offer extra protection to borrowers. Typically, you’d pay a higher rate in exchange for a longer lock-in period.

It’s important to ensure that you have given your lender a full and accurate picture of your financial situation before you lock in your rate to ensure you qualify for your locked rate. If your transaction details change significantly—either through changes to information related to your income and employment, or through changes to information about the home itself—your rate lock may be canceled.

At what point in the transaction should I lock in my mortgage rate?

Generally, you’ll want to lock in your rate once the home inspection and appraisal processes are both completed, especially with a home purchase. That way, you won’t have to worry about changes to the home’s condition or value voiding the rate lock. It can be difficult to time this perfectly, particularly for a refinance, so it’s best to lock your rate when you know you’re ready to move forward. When you work with Simplist, your dedicated loan expert will be with you every step of the way to ensure you lock in your rate at the stage that makes the most sense for you.

What if my rate lock expires and I’m still not cleared to close?

If you experience delays during the mortgage process, whether due to a third party or your lender, your rate lock may expire. This means that your interest rate will begin to fluctuate along with movements in the financial markets. At that time, your lender may be able to extend your rate lock (typically for a fee).

It’s important for you to maintain good communication with the team working on your mortgage application. That will help you head off any problems early and determine what strategies are best suited to your individual financial situation.

Simplist offers thousands of options to ensure that you find the lender and loan product that’s right for your mortgage. Whether you’re refinancing or purchasing your first home, you can get started on an application today to take advantage of record low rates. Talk to your Simplist loan expert about rate locks—they will help you understand your lender’s policy and how to decide when you should lock your loan.

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