There are several things you will want to consider when deciding when to lock your interest rate.
What's an interest rate lock?
Mortgage interest rates may change many times every day. Choosing when to lock your interest rate is an important part of the home financing process.
- When you lock your interest rate, the rate stays the same from the time of the rate lock until the rate lock expiration date (as long as there are no changes to your loan application that would affect your rate).
- If you don't lock your interest rate, it can move up or down based on market conditions. This is called "floating" the interest rate. (See Locking and Floating in the Frequently asked questions section below.)
A few things to consider when thinking about locking your rate
- Carefully consider how long you’d like to lock your interest rate. Some loans require longer rate lock periods. If your rate lock will expire prior to closing and disbursement of funds, a rate lock extension will be required to close your loan. We will extend your rate lock at no cost to you.
- When you lock the interest rate, you’re protected from rate increases due to market conditions. If rates go down prior to your loan closing and you want to take advantage of a lower rate, you may be able to pay a fee and relock at the lower interest rate. This is called “repricing” your loan.
- Before you can close on your loan, you'll need to lock in a final interest rate.
Tip
When you choose to lock your interest rate, you'll want to make sure your rate lock is long enough to take you to closing and disbursement of funds.
Reasons your interest rate may change
Even if your rate is locked, it can still go up or down if there are changes to your application, such as:
- The appraised value of the property is different from the value used when you initially locked your loan.
- Your credit profile or qualifying income changes between the time you initially locked your loan and the loan closing.
- Your requested loan amount increases or decreases after you initially locked your loan.
- The type of loan you are applying for changes.
- Your down payment amount changes.
- Some of your income information, such as bonuses or overtime income, cannot be verified.