Should I Lock In My Mortgage Rate Now?

If you have been keeping track of the mortgage interest rate market recently, you probably noticed that there is alot going on and that mortgage rates keep going lower and lower…

So the question people are asking is “When should I lock in my mortgage rate?”

It is only natural… everyone wants to get the best deal possible and everyone wants to get the best price… but wait tooo long and you end up with a higher mortgage interest rate…

So what is one to do with mortgage rates?

Here is what mortgage guru had to say….Jack Pritchard. In most cases, he says, the borrower’s credit and a computerized estimate of property value can be obtained within a few minutes, while the borrower’s income can be verified or at least checked for reasonableness within the day. These are the critical factors involved in a lock.

That does not mean that an honest lender will always provide an immediate lock to any loan applicant. Because locking imposes a cost on the lender, no lender wants to lock a loan that is unlikely to close. If the initial information available to the lender indicates that the borrower may not qualify for the requested loan at the posted price, the lender won’t lock. In that situation, the borrower must decide whether the lender has a valid reason for delaying the lock, or is using delay as a tool for gaining a strategic advantage.

There is only one reliable way to answer that question, and that is to determine whether the lender offers an objective method of disclosing its loan prices. If a price is communicated orally, or in an email, the borrower should assume that the lender is trying to game him with the delay.

On the other hand, if the borrower can find his price on the lender’s Web site, there is no strategic advantage to the lender of delaying a lock, because the borrower can check any future lock price. It may be higher or lower than the price on the day a lock was first requested, depending on which way the market has moved, but it is the correct price on the day the loan is finally locked.

At the end of the day….waht to do?

If you like to gamble, and like the uncertainty of things.. then wait it out….

But with regard to conventional wisdom… and mortgage rates….

Bottom line, “lock ASAP” is a good rule in today’s market, but to make it work effectively, it should be accompanied by another rule: “make the lender document your price.”

There you have it.

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