When Should I Lock My Loan?

This is a difficult, but personal decision for borrowers.  Interest rates are subject to change every day.  Some borrowers may naturally have more of a tolerance for risk than others.  There's no single right answer.

I personally am not a gambler and would rather know that the rate is locked than lose sleep if the market starts trending upward, but not every borrower shares my opinion.

I can share that rates are generally locked for either 15 or 30 days and on any given day the pricing is generally better for the shorter term lock (15 days).  So if you've been delaying locking your loan, I would never recommend locking it (with a 30 day lock) 16 days away from closing.  You're probably better off waiting another day to get the improved pricing on a 15 day lock.

Borrowers should ask themselves how much risk they can handle.  Often the process of purchasing a new home is stressful enough, and when weighed with all the other considerations, it makes sense to lock the loan well in advance of the closing.  Ask your qualified mortgage professional for his input.  If rates have gotten substantially better since you've locked your loan and you're still a ways away from your closing date, it may be possible for your mortgage professional to switch lenders and take advantage of the improved pricing with a new lock at a new lender.

Jason Sanders - Bringing Value to Financing - Residential, Commercial, & Hard Money
American Capital Finance
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