LOCK IT UPJuly 6, 2010
Interest rates have seen record lows for the past several years. Recently, interest rates on home mortgages have hovered around an amazingly low 5 percent. Low interest rates, bargain home prices, and government incentives have made this summer a magical time to buy real estate. But many economists are predicting a rise in interest rates in the near future. The reason for these rate hikes are complicated, but it is tied in with the Federal Reserve ending its mortgage-backed securities buyback program and the general weakening of the American dollar.
If you are in the process of buying a home and are worried about a rate hike, you should talk to your lender about locking in your interest rate while your purchase is in process. Ask your lender how long the rate lock will last. If you need longer than the standard 30 days in order to complete your home purchase, you can ask for an extension for the days you require, and they will give you an adjusted rate quote.
Rate locks make sense if interest rates are on the upswing and you can’t afford higher monthly payments. Ask your lender about locking in your interest rate to avoid paying more than you planned.