Understanding a Rate Lock

The first question we ask ourselves is......will rates go lower?

The second question we ask if we are optimistic and don't use it as a pessimistic approach...will rates go higher?

The answer is: It is unpredictable.

Who knew that rates would drop dramatically in 2016 when Britain voted to exit the European Union. It was in the middle of an upheave that rates came to an all time low.

Look at the other hand when mortgage rates rose after the Republican candidate won the U.S. presidential election in 2016.

Same year opposing results.

To understand what a rate lock is it may be important to explain just that. A rate lock guarantees your rate for a particular span of time. The usual is 10 to 60 days and often longer with a larger investment. What many do not know is that there is an investment to lock your rate. The more points (1 point equivelant to 1%) you pay the longer your lock could become and the lower your rate.

This is your safeguard if rates go up. YOUR LOCKED. What if rates go down dramatically? YOUR LOCKED. Your locked with that lender. Does that mean you could switch lenders and lock with a new lender after shopping rates? Absolutely. Remember that this is your loan for many years and if you can save hundreds a month to thousands a year, you need to do just that.