August 24, 2007, Newsletter Issue #78: Interest Rate Increases After Application

Tip of the Week

There are times when mortgage interest rates remain stable for weeks at a time and other periods when fluctuations, particularly increases, can occur daily, sometimes even hourly. As Clint Eastwood said “Do you feel lucky today?” You don’t want your mortgage loan interest rate to depend on pure luck. It can be much too expensive for most of us. Here is how to evaluate rate conditions.

Do your homework. Learn what is happening in the mortgage interest rate market when you are ready to apply. This information is available in all daily newspapers, via the Internet, and available if you shop around and ask potential mortgage lenders what the current trends are in the market. If you have any concerns about a potentially increasing interest rate market, demand that your mortgage source “lock” your rate at application. You want a sixty day lock or forty-five days at a minimum. You must close your loan within the lock period to be guaranteed this rate.

You may have some protection if any delays in closing your loan cannot be attributable to you. First, make sure no delays are your fault. Be sure to provide all information and documentation needed by your lender as soon as it is requested. Be diligent with your lender. Ask for updates in the completion of your application file regularly. In a declining rate market, you might “win” a lower rate. That is wonderful, obviously. However, in a rising market, the results could be disastrous for you. Protect yourself. Lock your rate if you have the slightest question if the rate might increase before you are formally approved for the mortgage loan.

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