Tim has been in the mortgage industry for more than 11 years as a loan originator and mortgage processor. He’s answered just about every kind of mortgage question over the years.
Q: I’m pre-qualified for a mortgage, but I haven’t found a home yet. Should I be concerned if interest rates are rising?
A: It’s true that increasing rates can diminish your buying power. A higher rate means either a higher monthly payment or a lower loan amount for which you can qualify.
To add to the stress, interest rates change throughout each business day because they are pinned to active markets. Mortgage interest rates are much like the stock market in that way.
While it can pay to watch rates, it can be counterproductive to watch them too closely before you have an accepted offer on a property. The last thing you want to do is choose the wrong property because you want the perfect rate. Buying the wrong home can be way more costly.
The best thing to do is find the right property that will suit you for years to come. Then, lock in your rate as early as possible, even if you think the rate may go down.
Don’t get greedy. Mortgage experts spend their lives trying to predict rates, and even they are blindsided by interest rate swings. Once you’re locked in, you can kick back, relax, and have peace of mind knowing you got a great rate.
But, make sure your lock expiration is at least a week or two after you think you are going to close. In today’s lending environment, a number of things can happen along the way to delay your closing.
Even if you’re a golden mortgage applicant, the seller of the home you are buying may not be so golden, and be delayed in moving out. You don’t want to lose your locked rate because you didn’t leave room for delays.