One of the questions I frequently get asked by borrowers is whether they should lock or float their interest rate. For purchases and refinances, it usually pays to get a rate locked in as soon as you apply. Most people are going to close on their purchase within 30 to 45 days, and, for the most part, rates do not move (with some notable exceptions) a whole lot during a time period that short. If a floating rate is going to keep you up at night between application and closing, you should consider locking in.

Keep in mind, for most people, what we are talking about is a savings of $10 to $20 per month if interest rates change by 1/8% or 1/4%. On the other hand, for people applying for a large loan, the payoff could be sufficient to elect to float. As a consumer, weigh whether you would be absolutely devastated if the rate went up slightly versus the potential savings to be gained. Today, many lenders offer at least a 45 day rate lock from application at no additional cost, and longer rate locks of perhaps 90 to 120 days at an additional cost of a 1/4 to 1/2 point. In fact, if you are looking at new construction, some lenders will offer six to nine month rate protection. Of course, what most people want is the best of both worlds: the ability to lock in a rate today and take advantage of any drop in the market before their closing.

Your best option is to get with a lender that knows how to drive the boat. Please feel free to contact me about rates and programs anytime.

Jake B