First-time homebuyers may not be familiar with all the options available to help them save money. A mortgage rate lock is something every buyer should know about, though.
What’s a Rate Lock?
A rate lock is an agreement between the buyer (you) and the lender (us, preferably) where you lock in your current interest rate for a set timeframe before closing.
Let’s say the initial rate you’re offered is 6.34%. That feels good and you want to avoid as much UNcertainty as you can for planning purposes. That’s where a rate lock can help.
No matter how the market changes, your rate will remain stable at 6.34% until your rate lock period ends.
How Will a Rate Lock Benefit Me?
Once your rate is locked in, it’s really locked in. That means you’ll know what your monthly payments will be so you can plan and budget as needed. UNlike buyers who choose to float their loan—aka, not locking in—you won’t have to wonder whether rates jumping up or down on the daily will help or hurt you.
What if the Rate Drops?
Interest rates can change very quickly, and a small change can make an UNdeniable difference when it comes to your mortgage. We often hear “But, what if a lower rate comes along while I’m locked in?!” It’s a good question, and the answer varies depending on the situation. However, our team is more than happy to work with you on lowering your rate to secure the best price and most UNcomplicated mortgage possible.
If you’d like to learn more, reach out to our team today.
This blog is intended for educational purposes only. For details about specific products or services, see credit union for details. For questions about investments, please consult your financial advisor.