When Is the Best Time to Float or Lock Your Mortgage Rate?

Buying a property, whether for commercial or rental purposes, is a valuable investment. The main barrier for most people is funding for a down payment. If you’ve saved the money, your next concern should be a monthly mortgage rate that fits your budget. Here are insights on when to secure an appropriate mortgage rate for your needs.

Prioritizing a Good Interest Rate

Your decision to purchase a property through financing should be based on various factors, with an affordable mortgage rate being a top priority. The interest rate on your mortgage should fall within your means over its term since it reflects the cost of the loan. You have options for how you can lock in a fixed mortgage rate.

Mortgage Rate Lock

Interest rates fluctuate based on the moves of the market and the Federal Reserve, so it’s advantageous to buy a property while interest rates are low. Lenders give you the option to lock in an interest rate during the closing period. The main risk to a mortgage rate lock is that the rate can go lower, which would equate to missing out on better savings.

Without locking in a fixed mortgage rate, you run the risk of paying an unexpectedly high rate in the future. Rates change every day, so a lock helps you plan your budget more clearly. Once you lock the rate, there are various ways to get it unlocked, such as if you change your loan type or if the lock is only for a specific time period. When the lock expires, you can request the lender to extend it.

Float-Down Mortgage Rate

Another way to lock in a fixed mortgage rate is the float-down option. A float-down mortgage rate allows you to get the lowest rate possible if it falls during a specific time period. Keep in mind you’ll likely pay higher fees to get the lower interest rate. Securing a good mortgage rate helps, but you won’t be locked into it forever if you decide to refinance your non-occupied property. In that case, it’s possible for the rate to come down.

Plan Your Mortgage Rate with Fidelity Mortgage Lenders

Getting a good mortgage rate is an important puzzle piece for securing the right property for your needs. Ideally, it’s a rate you’re happy with that isn’t going to disrupt your long-term planning. Contact our experts at Fidelity Mortgage Lenders for more information on finding the best mortgage rate in your journey to a new investment.

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