“Obtaining the lowest available interest rate on a mortgage should be every prospective homeowner’s objective,” says Lisa Smith from Investopedia. The reason is simple: Lower interest rates mean lower monthly mortgage payments, which means affordability in the short term, and significant savings over the long term, which is good news for you as you transition into your golden retirement years. But me telling you to “lock in a rate” isn’t enough. You need to know when to lock in your mortgage rate, since they can change so easily and frequently, due to the housing market changing all the time, up and down, etc. “While advertising may have lured you in with an impressively low mortgage rate, that rate might not be available months from now when you close on your mortgage,” says Smith. If you’re unsure or concerned about the state of the market in your area, or worried rates will climb before closing, your best bet is to lock in a mortgage rate, referred to as a “mortgage rate lock.” So, let’s take a closer look at what exactly a mortgage rate lock is. Essentially a mortgage rate lock is “an agreement between a borrower and a lender that guarantees the borrower a specific interest rate on a mortgage.” Bankrate.com expands on this definition of a rate lock as “an interest rate on a mortgage for a period of time. The lender guarantees (with a few exceptions) that the mortgage rate offered to a borrower will remain available to that borrower for a specific amount of time.”
With a locked-in rate, you won’t have to worry if rates go up,
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