If you’ve ever taken out a home loan or completed a mortgage refinance, you’ve probably asked yourself “When should I lock my mortgage rate?”  In this week’s Watch-It Wednesday, Quicken Loans chief economist, Bob Walters, discusses the right time to lock your interest rate.  If you have a mortgage question, send it to us at content@quickenloans.com. !  We might feature it on our next Watch-It Wednesday!

If you can’t see the embedded video, click to learn about the best time to lock in your mortgage rate.

Video Transcription:

Everyone who goes through getting a mortgage faces the question of: “Should I lock my interest rate, or not?” at some point.  Locking one’s interest rate means exactly what it says.  Interest rates are floating.  Interest rates move like stocks – they go up and down every day, they’re not fixed in time.  Once someone gets in process to get a mortgage they’re going to have to make a decision: “Do I want to lock in that interest rate?  Do I think interest rates are going to go higher?  Should I lock it, or should I float?  Should I wait and see if maybe interest rates will fall a little bit?”

A lot of people who could care less about interest rates, when they get in process for a  mortgage they become intensely aware of interest rates.  They care very much about what’s happening in the interest rate world and a few of them drive themselves absolutely crazy.

Whether or not you lock your interest rate or not, I think it primarily has to do with your situation.  If you’re refinancing your home or if your purchasing your home and you’ve looked at the payment based on today’s interest rates and if it makes sense – if you’re refinancing and your dropping your payment or if you’re purchasing a home and you could afford that payment – go ahead and lock that loan.  Don’t play the market, leave that to the professionals.

All too often people make mistakes.  They have that payment that they like and then they turn around and a week later the interest rates have gone up.  Don’t get too involved in what’s going on with interest rates because at the end of the day, on a $100,000 loan for example, a difference in an eighth is only about $8 per month.  Sure, we’d all like to have the absolute rock bottom rate but at the end of the day finding that payment that works for you is more important than trying to time the market.

Another thing with a rate lock that’s very important is: Once you make that decision to lock your interest rate – get it in writing.  This is very, very important so there is no discrepancy between you and the lender in the future when you think you were locked and they say that you’re not locked.  A lot of discrepancies come from that – getting it in writing protects you when you make that decision.

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