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What If Mortgage Rates Fall During Your Lock Period?

Wednesday, October 6, 2021

by Sandi Pressley

Buying a home in Albuquerque is a great opportunity at the moment, with mortgage rates lowest in several years. In addition to lower monthly payments, a lower interest rate also means that more people can qualify to buy a home. When you apply for a loan, the current interest rate is locked into your loan. But what happens if the rate falls further once it is locked in? What are the chances of getting the lower rate?

Lenders take rate locks seriously. You are reserving a rate when you lock it in with your lender. If rates rise before your closing date, you are protected. Most lock periods are between 15 - 30 days in length. It is crucial that the lock period last as long as the duration of your transaction.

The lock protects you in case the rate increases. But what if the rate decreases during that time? Would you be able to get the lower rate?

Even if rates fall just a little, such as by less than 0.125%, it won't make much difference to change the rate in your agreement, nor will your lender be very motivated to make the change. Your lender might agree to lower your rate if it decreases by more than 0.25%.

Changing lenders to get a lower rate is not a problem in advance of the closing date. This will allow you to have a lower rate. However, you also have to submit all your documents all over again to a new lender, including paystubs, tax returns, and bank statements.

Your lender should consider lowering your agreed rate if rates fall by more than 0.25%. For a lender, it's better to do so than lose your business. Since both of you have worked hard to make the deal work, it benefits both of you.

Also, don't expect to get the absolute lowest rate when you make the request. There may also be a small fee to make the change. In the end, do the math and decide if requesting a lower rate works out for the best. It never hurts to ask!

Contact us today to help you buy or sell your next home in Albuquerque. Looking for the perfect home for sale in Albuquerque? Our easy-to-use home search tool can help you start the process. Join us twice a week on our blog for more real estate advice and great reasons to buy a home in Albuquerque and the surrounding area. Follow us on Facebook for the latest Albuquerque real estate updates.

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What Can Affect Your Mortgage Rate?

Tuesday, August 8, 2017

by Sandi Pressley

You see advertisements for mortgage rates all over the media and internet. But how can you be sure that you’re getting the best rate possible? Even if you compare rates, they probably aren’t realistic. Here are some factors to take into consideration.

Economy – The global economy drives all interest rates, including mortgage rates
Property location – Lender costs can go up or down depending on state laws
Lender pipeline – How much business a lender is currently processing
Property type – Single family, multi-family, condo, mobile, co-op, etc.
Loan-to-value – Lower values get a better rate
Home use – Is this home being used for personal use, rental, or vacation?
Credit score – The higher the score, the better the rate
Points – Overall, the higher the costs, the lower the rate
Loan features – Term, documentation, rate adjustment, interest-only payments, etc.
Loan amount – If the loan amount is very high or very low, this can mean higher rates

Mortgage Rates Always Change

It’s true. In fact, rates can change in minutes! Even politics can affect the rate. As an example, when the President disbanded his business council, it sent rates into a tailspin within 20 minutes! So that means the rate you were quoted before and after that situation would have been much different.

The good news is that current mortgage rates are as low as they've been in 2017. But home prices are soaring in much of the US. To get a low rate and make your home as affordable as possible, you need to get several custom quotes from competing mortgage lenders.

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Mortgage Rates

Monday, February 29, 2016

by Sandi Pressley

Are you ever curious as to how mortgage interest rates affect your ability to purchase a home or what you actually pay over the full term of a the loan?

The national average for a 30-year, fixed rate mortgage has been under 5% for more than five years. Many assume these rates will stay that low indefinitely, but that is not the case.

Economists predict the improving economy, better job outlook and enthusiastic buyer confidence, will cause the Federal Reserve to start raising borrowing rates to banks, which will cause mortgage rates to become unstable and things to change drastically for consumers.

To demonstrate how changing mortgage rates impact your monthly payment, think about how much of a difference a small dip and rise in interest rates impact you.

According to the National Association of Realtors®, in December 2014, the average price for a home in the U.S. was $209,500. If you purchased a home for $200,000 and put 20% down with a fixed-rate mortgage (3.86%), your monthly payment would be about $750 a month. You’d make a total of 360 payments to equal $270,362.59 with $110,362.59 in interest over the period of the loan.

The same home with the same loan next summer could be vastly different. With the interest rates dropped to 3.59%, your monthly payment is $726.53 and your total payment adds up to $261,552.16 and $101,552.16 in interest. That’s not much of a difference, just under $25 a month and $8,810 in round numbers.

But if interest rates go up as economists predict, lets say as high as 4.9%, your monthly payments would look drastically different.

Your monthly payment would bump up to around $850 for a total of $305,698.59 and interest payments totalling $145,698.59. That’s an additional $122.63 monthly and $44,146.43 in interest by the end of the loan.

If you’re interested in buying a home, now could be the ideal time to do so, as mortgage rates are unlikely to stay this low much longer.

If you’re ready to see how affordable a home purchase might be with the current low mortgage rates, contact the Sandi Pressley Team today.

Have An Awesome Week!

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Mortgage Rates

Displaying blog entries 1-3 of 3