Locking In A Mortgage Rate

A Final Word

The more you can do to prepare yourself, before going to make application for your loan, the more you will have done to secure a loan that is acceptable to you. Gather all, or as much of the information needed, before you attend your meeting. Be sure that you have all the pertinent reports and data, for all the people involved, and be prepared to supply, in a timely manner, anything else that may be asked of you.

GOOD LUCK!

More About Locking In Your Interest Rate and Down Payment Options Available to You

Lock-in Rates Are A Commitment To You

When a lender makes a promise to you to lock-in your interest rate and points he is, in effect, protecting your interests and buying you time while your loan application is being processed. It can take between 14 to 90 days for a loan application to be processed. How many people are on the loan application, the availability of all the information that each must supply and the response time of former employers and lenders/creditors, to respond to the information and validation requests of the lender, will all affect the process. Locking in the rates for the appropriate period of time will protect you if the rates do rise while you are waiting.

Arms Or Fixed Rates?

You must be able to judge for yourself whether or not you want to have a shorter loan period, ten to twenty years, with higher rates or a longer loan period of up to thirty years but with lower interest rates. Some home buyers elect to borrow within the structure of an Adjustable Rate Mortgage. An Arm is one where the rates will most probably be lower than those of a fixed rate mortgage but will increase over time as interest rates change. If you feel that the rate market in your area is fairly stable and will only increase nominally over the years you may wish to enter into an ARM.

Larger Down Payments And Points

For those home buyers who are fortunate enough to be able to initially put down over 20% they will receive the best/lowest rates available at the time of the loan. Conversely, if you are strapped for ready cash and can only put down a minimum of 5% you will be asked to pay a considerably higher rate of interest. Those who do have ready cash can also opt to buy points. Buy purchasing points you will lower the rates and thus lower your future monthly payments.

One More Way To Save Initial Costs

If you prefer to have the lender pick up the closing costs they may consent to include them in the overall repayment of the loan itself. Keep in mind this will increase the amount you are borrowing and thus raise the monthly payments expected over the life of the loan.

What Else Can Affect The Cost Of Your Loan?

If you have had very bad or very good credit in the past this will directly affect your loan rates. By having a bad credit score you are a higher risk to the lender and they will require a higher rate of interest or possibly mortgage insurance. However, if you have a sterling record of repayment, and satisfying your creditors, you will be offered lower rates and better terms. So be sure to keep your credit in order and thus allow for a higher FiCO score when ever you need to submit your credit history for loans.

The ratio between your income and your debt is also of great importance. If you are living close to, or beyond your means, most lenders will shy away form lending you anymore money. If they were to lend you the funds and you were to then have financial difficulties due to loss of your job, an accident or catastrophic illness they feel you would then be at risk of not being able to make your repayment schedule. This will also cause your rates to be higher and less advantageous to you.

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