You have options to safeguard yourself from fluctuating rates.

Over the last few years, interest rates have been historically low, but that's not the case anymore. We are seeing rates in the 5% range right now, depending on which lender you're using. A question that we've been getting a lot is: “What happens if interest rates go up or down while I'm under contract?” 

When you go under contract on a house, your interest rate is a quote. Interest rates can change every day, so ask your lender what the interest rate is. Once you know that, inquire about these two options:

“Interest rates can change every day.”

1. Rate lock. You can lock your interest rate in for up to 60 days. New-construction homes that take six months to close are the exception, you won’t be able to lock in your rate in that scenario. However, on a typical 30- to 45-day transaction, you can lock your interest rate in right away. Otherwise, you can opt to watch the rate and wait for it to hit a number that you're comfortable with and then lock it in. If rates go up after you lock in your interest rate, you are still locked in at that lower number.

2. Float-down. If the rates go down a certain percentage, some lenders will let you lower your rate during a certain period until closing. For example, if it drops 0.25% within ten days before closing, your lender might let you go down to that new rate.

Interest rates are currently on the rise. Don’t get stuck at a 6% rate if you don’t have to. Talk to your lender about the best time to lock your rate. If you have any questions, feel free to reach out to us at any time by phone or email. We look forward to hearing from you.