How Can You Get the Lowest Possible Rate?

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With interest rates hovering near all-time lows, and talk of them rising by the end 2015, many people are asking whether they should lock in a low rate now. Today, we answer that question!

All loans are locked in at some point prior to closing. The question is whether you do it earlier in the process or later. Consider the following points to help you decide if you should lock sooner:

• Locking in sets the interest rate of your loan for a specific number of days. 
• Typical locks run in 15-day increments, up to 60 or 90 days.
• Once set, it's important for your loan to close within that period. 
• Locking is safe only if you're sure of the closing date.

Floating is the opposite of locking, and simply means your rate is not yet set. It's floating with the market - if rates go up, yours will too; if rates go down, yours will as well. 

So, is it better to float, so you can potentially lock in a lower rate at some point in the future? 

The problem with deciding when to lock your rate is that the best decision only becomes clear after the fact. If you float your rate until the last possible moment and rates fall, you win! If you decide to wait, however, and rates end up rising, you're going to be stuck with a higher monthly payment.

Nobody is really sure how rates are going to change over a given period of time. The best decision is really determined by your piece of mind - which option are you more comfortable with? Keep in mind that very few people ever lock at the perfect time. The market is always moving, and there are just too many influences that cannot be predicted.

Once your loan is closed, it's pretty easy to refinance if rates fall. If rates rise, you can be comfortable knowing you locked in a low rate ahead of time. Bottom line: the difference in rates from offer to close is usually pretty small. Since none of us can predict the future, simply do what will give you the least stress during the process.

Whatever your lending needs, don't hesitate to reach out to the Caragiannides Team! We would love to help make a difference!