How to Use Lock in Periods for Your Mortgage – courtier hypotheque

As a potential home buyer, you will by now understand the concept of a lock in period, where the rate and points of a loan are locked in for a certain period. If a loan is locked at a certain rate and number of points for 30-days, for example, the lender is committed to make the loan at that rate and those number of points anytime within the following 30 days from the signing of the lock in agreement – courtier hypotheque.

On the other side, if you are not able to close your mortgage within this 30 day period, the lender is no longer bound by the agreement. In many cases, this does not cause any loss since the interest rates may not have increased and may even have gone down.

Most borrowers are offered a 30 day lock in period, but this is not practical in some situations to locate, contract on, inspect and close a house in 30 days. Most buyers want to have a cushion of 15 or more days in their lock in period, but a lender will most likely charge more for a longer period.

So the first decision you have to make is whether a lock in period is the right thing to do right now. Do you believe interest rates will rise? Or are you of the opinion that a faltering economy will mean rates are going no where but lower?

Another concept many homeowners have is that they don’t want to have to make this decision, they just want to know the numbers they have to work with in buying their home.

The lock in rate creates a time pressure since most of them want to have a preapproval before they look for a home. Now you have to rush to get the home loan negotiated just as you are just starting to look for a home – courtier hypotheque. This time pressure makes it difficult to shop for the home and negotiate it and close in a thirty day period.

If you have a good idea of the location and type of home you want, it can be done quickly. And of course, in today’s environment, sellers are very aggressive, so negotiating should be fairly easy and smooth. It is a good idea to contact a home inspector in advance so you don’t have to waste time on this step.

Another reason one may choose to use a lock in rate is if you barely qualify for a mortgage. If you are in such a situation, small changes in your own circumstances or the economy may eliminate your chance at a home loan.

So a lock in rate is for you if you feel rates may increase, if you don’t like to take the risk that they will, or if you are concerned you will no longer qualify for the mortgage if they do.

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