When is the best time to lock in your mortgage rate?

If you are in the market to purchase a new home, deciding when to lock in your mortgage rate can feel like a tightrope act. You hate to lock in too soon and not get a contract in time... OR watch the interest rate rise and wish you had locked it in. ​

Deciding on the right time to lock in mortgage rates is more of an art than it is a science. The key is to be aware of what is happening with mortgage rates as you get ready to start your search for property and to watch it regularly throughout the process. Don't forget to ask the lender what programs they have, as some may allow the opportunity to take advantage of drops in rate after a lock in.
Locking in your mortgage rate allows buyers protection against fluctuating mortgage rates as you prepare to purchase a new home. It helps make the process more predictable from a financial sense, but picking the right time is important as there are often defined windows of time the lock is good for.
​According to a recent article written by the National Association of Realtors, there are some criteria to apply in determining when to lock an interest rate in: 

• THE DEAL IS MADE: If you have had your offer to purchase a home accepted with the legal contracts signed by both parties, you will want to firm up your plans to lock in. Many lenders will allow you a 30 day window for free to lock in, but you may have to pay more if your closing is beyond a 30-day window.

• RISING INTEREST RATES: If interest rates are on the rise, you may want to consider locking in a rate to help ensure that your loan has the best interest rate possible.

• VOLATILITY IS AFOOT: If you are seeing swings up and down in interest rates, you may wish to lock in a rate to give you stability. 

• ON THE CUSP: If you are close to the line on qualifying for a loan, you may want to consider locking in early. If a borrower is near the limits of qualifying, upward fluctuation could make the difference between qualifying or not qualifying if the rise takes the monthly payment above the threshold of what the lender would be willing to approve. (NOTE: many lenders us 28% as the threshold, meaning they want the house payment to be 28% or less of gross monthly income).​