The question, "What if rates go lower?" overwhelms the mind of every mortgage consumer. The reality is that interests rates move up and down and educating yourself can help you make an informed decision on when to lock in the best Denver mortgage rates.
Mortgage rate lock explained
A mortgage rate lock is a commitment by alender to give you a home loan at a specificinterestrate, provided you close on your home in a certain period of time(which is typically 30 days from when you're approved for your loan). This rate lock offers protection against fluctuating interest ratesuseful considering that even a quarter of a percentage point can take a huge bite out of your housing budget over time.
For instance, let's say you get a 30-year mortgage for $320,000 ata fixed 4% interest rate. That means that over the next 30 years, you will ultimately end up paying$149,982 in interest. But let's say that you got a loan when rates were higher at 4.25%, forcing you topay $166,715 in interest by the time you're donethat's an additional $16,733, all because your rate ticked up by a measly quarter of a percent! (Calculate your own mortgage payments and interest with anonline mortgage calculator.).
So your goal, of course, is always to lock in the lowest Denver mortgage rates.
And that's why mortgage rate locks are so important for peace of mind:No matter how wildly interest fluctuates, once you're œlocked in, you know what you're in for once you're making monthly mortgage paymentson your home. And you can plan your long-term finances accordingly.
When (and for how long) should youlock in your Denver mortgage rates?
Many borrowers obsess over the best time to lock in a mortgage rate, worried that they'll pull the triggerright beforerates sink even lower, and miss out on saving thousands of dollars more. The truth is, trying to time your rate lock perfectly is about as impossible asaccurately predicting the stock market. So, don't torture yourself with minor ups and downs. A far biggerquestionto consider is where you are in the process of finding a home.
While you can lock in your rate at any time and for a wide range of durations (up to 120 days), most experts say it makes sense to lock ina rate once you're œin contract on a homewhich means you've made an offer that's been accepted.
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