Whether to lock or float a mortgage rate is a crucial question for borrowers. And one that's not easy to answer.
When you float a loan, you haven't yet secured a lender’s quoted interest rate. Floating means you're willing to take the risk that interest rates will either not go up or that they will fall before you close your loan.
A rate lock is an agreement from a mortgage lender to hold a specific mortgage interest rate for a specific time period, even if rates rise. There are typically four elements to a rate lock. They should be clearly shown on the confirmation you receive once you notify the lender that you want to lock in your rate.
- Interest rate – your rate depends on the market conditions on the date you choose to lock your rate
- Points – funds paid to get a lower interest rate
- Lock period – how long the agreement will be valid
- Loan product – what type of mortgage the agreement applies to
When to lock in your rate
Deciding when to lock in involves some guesswork. No one can predict future interest rates with certainty. At Virginia Credit Union you can lock in a rate at any time during the mortgage application process:
- When we receive your application
- During processing of the loan
- When the loan is approved
- Up to three business days prior to your loan closing
Locking in your interest rate
After we receive your completed application and mortgage deposit, you may give us your written lock-in request between 10 a.m. and 4 p.m. on any business day. For purchase transactions we will need the fully executed sales contract.
There are three ways to submit your lock-in request:
Your request should include the specific rate and points available that day which you wish to lock in and it must be signed and dated by you or a co-applicant. We also need the property address if that has not yet been provided.
We will send a confirmation letter within 5 business days of receiving your lock-in request to let you know that we received and accept your request. This letter is not a commitment to make the loan or to close your loan by a specific date.
If you have any questions about locking in an interest rate, please contact us.
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