Should You Lock Your Mortgage Rate Today?
The CPI inflation data came in lighter than anticipated on Thursday. This meant that prices didn’t rise as much as expected, which is usually good news for mortgage rates. Interestingly, while initially, the bond market reacted positively, by the end of the day, the enthusiasm had cooled down. The market decided to take a slower, more careful approach this time, aiming for steady progress instead of a big, quick change.
This brings me to the question I get asked all the time: Should I lock my rate today or wait?
Generally, a mortgage loan officer has a good feel for the market. So, listen to your loan officer. Unless you’re a professional in the stock market, your loan officer will likely give you good advice since he/she constantly monitors the bond market. The loan officer understands the correlation between stock market movements, bond market movements, and mortgage rates. At the same time, remember that no one can guarantee future rates. Even the professionals guess, albeit an educated guess. Anyone who claims to know what the rates will look like tomorrow or next week, should have already made their billions and would be relaxing on their private island!
While there is no one right answer to whether you should lock now or wait for a better rate, certain factors can help narrow down the decision. For example, if you have already found a house and need to close in 45 to 60 days, you should lock the best rate you can get within a week, instead of waiting in an open-ended manner, to perfectly time the market.
Resist the tendency to rely on the hope that the rates will go down next week or the following week. Rates may go down indeed, but they can just as easily move higher and stay there for months. On the other hand, if you can wait a few months because your new construction home is not closing for a few months, you could wait and monitor the rates until you get a firm closing date from the builder. I will be happy to monitor the rates on your behalf and alert you when it’s a good time to lock, based on recent trends.
It is normal human tendency for buyers to try to second -guess themselves because of the worry that the rates could go down or your neighbor/friend got a better rate. We frequently find ourselves in the slowest moving lane when driving in traffic and very often, as soon as we switch lanes to get in a faster moving lane, that becomes the slowest lane. Similarly, we worry about the rates – if we lock now, the rates might drop tomorrow, and if we don’t lock now, the rates may go up. This fear is normal, but a little discipline and an objective assessment of the market can help you get over this state of indecision.
It helps to remember that you are not locked into your current rate forever. There are effective strategies to mitigate the risk of being stuck with a high rate. BankSouth offers the option to mitigate this risk with a FREE one-time Rate Float down to a lower rate if the rates go lower before your closing (at least 10 days prior to closing). Even if you close your loan at a higher rate and the rates drop in the future, BankSouth offers a No Lender Fee Refinance* option that allows you to refinance at a lower rate!
Bottomline, you can rest easy knowing that your decision to lock today can be future-proofed with our FREE one-time Rate Float-down and No Lender Fee Refinance*!
To recap, while deciding on what rate to lock can become a stressful decision if you start thinking in terms of the total cost of loan over the life of the loan, remember that few people keep their loans for 30 years. Between float-down and the refinancing options, you have parachutes available to help glide you to a safe and happy landing!
The BankSouth Mortgage Advantage:
Experience the speed of ReadyApprove from BankSouth Mortgage, where you can secure conditional approval for conforming loan limits within hours. You’ll be armed with the confidence to quickly submit an offer, and the seller will see you as a serious, prepared buyer.
*Must refinance after 6 months from the 1st payment date and within 5 years of the close date. Available for new applications on or after 6/15/2023. Subject to credit and property approval. Additional conditions may apply. Terms are subject to change. “No Lender Fees” only apply to origination charges.
Blog post date: Thursday, July 12, 2024
