Should I lock my rate down?
"Ya just gotta ask yourself one question: Do I feel lucky? Well, do ya, punk?"
- Clint Eastwood as Dirty Harry
Locking your interest rate down means that the broker or banker will give you a commitment for a loan at today's current rate (typically for 30-60 days). This is always a good idea. If you're worried that the rates may go down further while your loan is being processed, ask yourself this: Am I a risk-taker? Yes, the interest rate may go down, but it also may go up, no matter what the loan officer or anyone else may say. I've seen it happen lots of times: everyone says the rates are going down and it goes up, sometimes way up. If the rate goes up, you may have to pay as much as an extra point to get your original rate if you didn't lock it down.
Remember also, when you say you want to lock the rate that the loan officer goes and sends in the paperwork to the banker selling the loans and they give him a commitment. What if the rate does go down? It's not fair to ask the loan officer to break his commitment to the bank where he's buying his loans and relock you at a lower rate. Doing this a lot can dry up future supplies of loans if the loan officer gets a bad reputation. After all, if the rates go up, don't you expect the bank to keep its commitment and give you the lower rate?
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Document last modified Tuesday, 26-Apr-2005 16:23:26 EDT
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