You know how the stock market is always going up and down? Sometimes mortgage rates can change just as unexpectedly. Because of that, deciding when to lock in a rate or whether to keep “floating” is a scary thing.
Once you’ve been pre-approved, your rate is floating. Floating means that your rate will be whatever the market dictates at the time you lock it in. Normally to even begin locking in a rate, you need to sign a purchase agreement, otherwise, you’re floating.
Locking in a rate means that for a certain period of time, usually about 30-45 days, you can be assured that your interest rate will be whatever you locked in.
But just because you can start to lock in a rate as soon as you have signed a purchase agreement, doesn’t mean you should do it then.
So the next question is, when should I lock the rate? The answer, unfortunately, is complicated.
Rates tend to move up and down, just like the stock market, and they can be difficult to follow. But that doesn’t mean they’re impossible to anticipate.
As soon as you start looking for a home, you should start getting familiarized with the current trends for rates. A good idea is to also play around with a mortgage calculator to test different payment scenarios for different interest rates.
One of your best bets is to rely on your VA loan expert for advice. They should be more aware of current market trends and be able to recommend the best course of action. They can usually point out what the rates have been doing and where it looks like they might go. They can even give a recommendation on whether it’s a good time to lock, or whether it’s worth the risk to wait.
All of that being said, it’s important not to have buyers remorse when you finally do lock in your rate. No one has a crystal ball to tell you what the future will hold. Plus, even if rates did go up a little after you locked in, you’d make home buyers from the 1990’s very jealous with today’s rates as low as they are.
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