Locking in a Favorable Rate
Now more than ever, the behavior of our country’s
volatile financial markets is hard to predict. For consumers
looking to finance a second home mortgage loan, being
quoted a good interest rate is only half the battle.
You need to be sure that the rate that you were promised
at the beginning of the mortgage loan process is the
one you actually end up with once the loan closes.
Once you have decided on which lending institution
will finance your second mortgage loan and have begun
the application process, talk with your loan officer
about when and how you can “lock in” the
interest rate on your loan.
Depending on the institution’s particular policy,
you may be able to lock in your rate as soon as the
application is filed. Other lenders may not allow you
to do so until the mortgage loan has been processed
or after it is approved.
Remember, any promise to lock in a rate should come
in writing. Though a verbal assurance is usually made
in good faith, it is far easier to prove the authenticity
of a written agreement. You may want to show the written
agreement to a real estate agent or lawyer to make sure
it is valid.
While locking in your rate is often a good move, especially
if interest rates are on an upward trend, do not rush
to do so without consideration first. Find out if your
lender charges a fee for this service, and what happens
to the fee if the loan fails to close. Also ask your
loan officer what will happen if rates go down during
the period covered by your lock in period.