Time to lock in your mortgage rate

 Lock in your mortgage rate to save loads

If you find a reasonable mortgage rate just lock in because the mortgage rates are increasing very fast. If you can lock in at a lower rate, then you will be safe from the increasing rates and may ultimately save thousands of dollar.

The scenario during the housing boom was different. At that time, you had a lower mortgage rate in between 5.5% to 6.5%. The fluctuation was very less and offers were enough. So you really didn’t have to bother at that time. But, now the market is very volatile as it has been witnessing crisis in the housing market and there seems no chance of an early recovery. Mortgage rates are fluctuating very widely and so if you lose an offer, then it may be gone forever.

The average rate for a 30-year fixed mortgage is 6.52%. The same rate was less than 6% in May. The experts expect the mortgage rates to go up further in the weeks to come. Due to inflation and investor weariness of the mortgage securities, the rates may even reach &5 at the end of the year, according to forecasters.

Now, why is a slight increase in the mortgage rate is important for you? Suppose if you have a mortgage of $200,000. Now, let’s see how a small change like only a half point increase in the mortgage rate, can affect your mortgage payment and your finance-

For a $200,000 mortgage, every half point increase in the mortgage rate will means $70 added to your mortgage payment every month. In a year, you will pay $800 more and in the first 10 years of your 30 year mortgage, you will pay $8000. This is for only a half point increase. Calculate an increase of few points in the mortgage rate.

How to lock in

Locking in a mortgage rate is easy. If you have a contract or a binder on a home, then tell your mortgage broker to lock in a particular rate which is available. You can lock in a rate for as long as 60 days, with a minimal cost.