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Where Will My Home Mortgage Interest Rates Be On Closing Day?
By EchoBay Loans Staff Writer

There are few things in this world that are ever constant and certain, and home mortgage interest rates are not one of those things. Nothing frustrates a home buyer more than being quoted one mortgage interest rate, and then arriving at the closing table to discover that the interest rate has magically increased in the matter of a month or two.

Akin to the ups and downs of the wildest of roller coasters, home mortgage interest rates have a history of insane highs and fabulous lows. Granted, it would take something quite drastic to see a substantial jump in rates over the period of just a few days, but it's not impossible and it rarely takes just a few short days from the start of the mortgage application process to the end of the road at the closing table.
Add that to the fact that even just one percentage point can equal thousands of dollars over time, and you definitely want to make sure that you get the lowest home mortgage interest rate possible.

So how can you be sure that the interest rate you wind up paying isn't higher than the rate you were quoted when you applied for your mortgage loan? Luckily for consumers, there is a way to lock in your interest rate before the day of closing. When you have a locked-in rate, your mortgage lender is committing to a contract that states that the rate you are being quoted is the same rate that you will be obligated to on closing day. This method is used to protect borrowers from the possibility of increasing interest rates during the mortgage process.

Does that mean you should automatically lock in your interest rate the minute you apply for your mortgage? Absolutely not. When you lock in your mortgage rate, you will not be able to renegotiate that rate. That means that if interest rates drop during the mortgage process, you're still going to pay the higher, locked-in rate. Because of this, it is important to only lock in a rate when you are doing so based on sound knowledge and advice.

To make sure that you get the best mortgage rate possible, you're going to want to work with a seasoned professional and you will want to ask them if they think the interest rates are going to be going up or down over the next month or so. If it appears that rates are going to be going down, don't lock in the rate just yet. Set a "target" rate and wait for home mortgage interest rates to drop to that point.

When the rates reach your mark, lock in the rate at that time. However, if your mortgage professional tells you that he expects rates to increase or if you see rates start to rise instead of drop, don't wait to lock in your rate. That would be a good indicator that it's time to lock in the current rate so that you don't wind up paying a substantially higher rate when it's time to close the loan.

If you do decide to lock in the current home mortgage interest rates, there are some important things that you will need to know. The first thing to consider is that when you lock in a rate, that rate is not locked in forever. There is a set amount of time that the locked rate is good for, usually ranging from 30-60 days. If the loan isn't closed before the expiration date of the rate lock, the contract will expire and the current interest rates at that time will become your playing field.

It's also important to understand that locking in your interest rate is not necessarily a free service. While many lenders will not charge you a fee to lock in a specific rate, there are brokers who will. There are also fees that you might incur should you lock in a rate and then decide not to complete the loan. Before locking in your rate, make sure that you understand all fees that you will be responsible for.

Locking in an interest rate can be one of the wisest consumer decisions a home buyer can make, and doing so forearmed with the knowledge of how the process works and what to look for will ensure that you get the best rate possible and that you don't encounter any unpleasant surprises on closing day.

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