Understanding Mortgage Rates | dripp inc | Home Equity | Refinancing and Remortgage Guide

Interest Rate Lock Success – 5 Simple Steps

Knowing when to lock in a mortgage interest rate is extremely important during these turbulent times.  Rates can take a nosedive in the morning and end up even higher than before in the afternoon.  This is why it is important, especially now, to know when to lock your mortgage rate. 

Let us assume that you are ready to refinance your home in order to lower your rate, get out of an adjustable rate mortgage, or to take some cash out to fix your roof or to send your kid to college.  Regardless of why you want to refinance, it is important for you to try getting the best possible loan and at the best possible rate.  In order for you to do that, there are a few simple steps for you to take.

5 Simple Steps to a Great Rate

1) Figure out your time frame and stick to it – Let’s say you need to take out $50,000 from the equity of your home to pay for your son’s first 2 years of college and you want to have the money in your hand within 30 days.  Your program and interest rate has to be finalized about 10 to 15 days prior to you receiving the money.  During the first 15 days, follow the market and stay in touch with your mortgage consultant for updates.

2) Decide on a Mortgage Company – After speaking with two or three lenders you will realize who really wants to help you and who is just patronizing you by promising the world for free.  The fact is, practically every company offers the same exact rates with very similar costs.  Pick a company that is at least located in your state or the surrounding proximity and has been in business for a long time.  Also, the mortgage consultant should be asking you a lot of questions in order to properly place you into the best program.  Remember to also ask if the company offers a “float down” option if rates improve after you already locked in.  Mortgage Brokers usually offer this option for two to three weeks after your original lock!  This means you can get a lower rate even if you originally locked into a higher rate.  There are usually limits to this, but most places will lower your rate as long as is it decrease by more than .25%. 

3) Get your paperwork ready – Fax whatever income paperwork the mortgage consultant requests as soon as possible.  Most companies will not lock an interest rate for you if your information is not verified.  If rates dramatically drop one day and you have not sent the required documents, you can lose the chance to take advantage of the lower rate and the time.

4) Read our Rate Lock suggestions – We update our information two to three times per day in order to help people know what to expect with short term and long term mortgage rates.  We also let you know when those big “Mortgage Rate Dips” occur. 

5) Stay in close touch with the Mortgage Company – Call your mortgage consultant every two days and ask about what is going on with your loan (although he/she should be giving you updates every day) and what is going on in the market.  Use the information you obtain from our website to your advantage.  Check out our daily mortgage rates update here.

The key is for you to stay up-to-date in this quickly changing industry so that you can achieve the best possible program.  WARNING!!! Sometimes after you close your loan, interest rates slightly improve just to spite you.  Relax and know that you maximized your opportunity during the time frame you set and move on. 

After the loan is complete, keep in touch with your loan consultant every 3-6 months and ask him/her where the rates are.  If you do what we recommended, chances are that you will not need to refinance again.  

Good Luck!