Locking In The Interest Rate On Your Mortgage

Authored By: Dan Lewis

Many people purchasing homes are surprised to learn how quickly interest rates can change. This brings up the subject of locking in the interest rate on your loan.

Locking In The Interest Rate On Your Mortgage

Contrary to popular opinion, interest rates for mortgage loans are not set by the Federal Reserve Bank. This assumption, however, is understandable given the uproar one tends to see in the media every time the Chairman of the Federal Reserve makes any mention whatsoever about raising or lower rates. Of course, you should understand he is discussing the rate that will be charged by banks to borrow from other banks. Interest rates on mortgages, on the other hand, are set by the bond markets among other indicators.

Since bond markets move every business day, the mortgage rates move in a corresponding matter. Even a tiny change can impact how much or little money a lender will recover given an assumed payback of a 30-year loan. To protect yourself from these fluctuations, you must understand how to lock in the interest rate on your loan.

A mortgage cannot be finalized until the interest rate is locked. If you don’t address the issue with the lender, the rate can move up or down every day from application to the actual funding of the loan. This can literally be two or three months if you are getting pre-approved before making an offer on a home. This kind of volatility is dangerous, particularly if you are pushing the limits of your cash flow in buying a home. If rates increase half a percent while you are shopping, you may be unable to make the monthly payments when you finally buy the property of your dreams!

Locking in a loan is all about points and the length of the lock. These issues are negotiable with the lender, to wit, there is no legally required standard. To lock in a rate, you often must agree to pay a percentage of points. The longer you want to lock in the rate, the more you pay. For a 30 day period, you can expect to pay a quarter to a half of a point. For a longer period, expect to pay half to a full point. A point is one percent of the total loan. If a lender tries to charge you more, take your loan elsewhere or get a mortgage broker involved.

Fluctuating interest rates are dangerous since they can impact your month payments. Locking in your rate gives you a definitive figure to work with when buying your dream home.

Dan Lewis is with Great Western Mortgage - San Diego home loans provided by San Diego Mortgage Brokers. Great Western Mortgage is a San Diego mortgage company providing San Diego mortgages, San Diego home equity loan and San Diego mortgage solutions.

Article Source: http://www.FinanceNook.com
Your One-Stop Quality Finance Article Source

Home | Loans | Mortgages-refinance

Read Additional Related Articles from the Mortgages-Refinance Category

Listed below are more articles related to the above article.

People interested in the above article "Locking In The Interest Rate On Your Mortgage" are also interested in the related articles listed below:

A New Mortgage Elimination Scam - By : Jeanette Joy Fisher
Self Certificate Mortgages – Prove Yourself! - By : Joe Kenny
Fixed Rate Mortgages – Know Your Rate! - By : Joe Kenny
Remortgage And Its Advantages - By : Amanda Thompson
Tips for Mortgage Refinancing and Debt Consolidation - By : Natalie Aranda
Adjustable-Rate Mortgage Payment – Things You Need To Know - By : James Calvin
Growing Problem In Real Estate - Mortgage Fraud - By : Glenn Ginsburg
Finding The Right Mortgage Company - By : James Calvin
Finding The Best Equity Home Loan Rate - By : Oliver Turner
Mortgage Lenders And How To Find Them - By : James Calvin

Read more related articles in Home | Loans | Mortgages-refinance

Return Home

FinanceNook.com Home

Featured Sites

Internet Marketing
Website marketing strategies and tips for promoting a business online

Small Business Marketing
How to get more customers or clients than you ever dreamed possible

Social Bookmarking

Bookmark on del.icio.us

Popular Articles

RSS Feeds

FinanceNook.com Home | Top of Page

United States of America . United Kingdom . Canada . Afghanistan . Albania . Algeria . American Samoa . Andorra . Angola . Anguilla . Antarctica . Antigua & Barbuda . Argentina . Armenia . Aruba . Australia . Austria . Azerbaijan . Bahamas . Bahrain . Bangladesh . Barbados . Belarus . Belgium . Belize . Benin . Bermuda . Bhutan . Bolivia . Bosnia-Herzegovina . Botswana . Brazil . British Virgin Islands . Brunei Darrusalam. Bulgaria . Burkina Faso . Burundi . Cambodia . Cameroon . Cape Verde . Cayman Islands . Central African Republic . Chad . Chile . China . Colombia . Comoros . Congo . Congo (Dem. Rep.) . Cook Islands . Costa Rica . Côte d'Ivoire . Croatia . Cuba . Cyprus . Czech Republic . Denmark . Djibouti . Dominica . Dominican Republic . East Timor . Ecuador . Egypt . El Salvador . Equatorial Guinea . Eritrea . Estonia . Ethiopia . Falkland Islands and Dependencies . Faroe Islands . Fiji . Finland . France . French Guiana . French Polynesia . Gabon . Gambia . Georgia . Germany . Ghana . Gibraltar . Greece . Greenland . Grenada . Guadeloupe . Guam . Guatemala . Guinea . Guinea Bissau . Guyana . Haiti . Honduras . Hong Kong . Hungary . Iceland . India . Indonesia . Iran . Iraq . Ireland . Isle Of Man . Israel . Italy . Ivory Coast . Jamaica . Japan . Jordan . Kazakhstan . Kenya . Kiribati . Korea (North) . Korea (South) . Kuwait . Kyrgyzstan . Laos . Latvia . Lebanon . Lesotho . Liberia . Libya . Liechtenstein . Lithuania . Luxembourg . Macau . Macedonia . Madagascar . Malawi . Malaysia . Maldives . Mali . Malta . Marshall Islands . Martinique . Mauritania . Mauritius . Mexico . Micronesia (Federated States) . Moldova . Monaco . Mongolia . Morocco . Mozambique . Myanmar (Burma) . Namibia . Nauru . Nepal . Netherlands . Netherlands Antilles . New Caledonia . New Zealand . Nicaragua . Niger . Nigeria . Niue . Norfolk Island . Northern Mariana Islands . Norway . Oman . Pakistan . Palau . Palestine . Panama . Papua New Guinea . Paraguay . Peru . Philippines . Poland . Portugal . Puerto Rico . Qatar . Reunion . Romania . Russia . Rwanda . Sahara . Saint Helena . Saint Kitts and Nevis . Saint Lucia . Saint Pierre & Miquelon . Saint Vincent & The Grenadines . Samoa . San Marino . São Tomé & Príncipe . Saudi Arabia . Senegal . Serbia . Seychelles . Sierra Leone . Singapore . Slovakia . Slovenia . Solomon Islands . Somalia . South Africa . Spain . Sri Lanka . Sudan . Suriname . Swaziland . Sweden . Switzerland . Syria . Taiwan . Tajikistan . Tanzania . Thailand . Togo . Tongo . Trinidad & Tobago . Tunisia . Turkey . Turkmenistan . Tuvalu . Uganda . Ukraine . United Arab Emirates . Uruguay . Uzbekistan . Vanuatu . Vatican City (Holy See) . Venezuela . Vietnam . Yemen . Zaire . Zambia . Zimbabwe

Template Design by Larry Lim | Powered by Article Dashboard