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There is no best time to apply for a mortgage loan. You need or want one when you need or want one. If you want to refinance, you will have some choices of timing. But the market will be what it is, always outside of anyone's control. In a rapidly increasing interest rate market, you should not apply for a mortgage loan if you have an option. The problem is usually you do not have such a choice. If the rates are still “affordable” and you wish to purchase a home, you will just have to make the best decisions available.
The best time to lock a mortgage rate is usually all the time. However, in a declining rate market or an unusually stable one (like the period from 2001 through 2005), a rate lock is not critical. In fact, you might even end up with a rate lower than the one available at your application submission date. If your lender of choice during declining market conditions wants to charge you a substantial fee for locking a rate, you might want to pass. However, in a rising or unstable market, locking a rate is always an excellent idea. If you are buying an owner-occupied home and your debt-to-income ratio is “tight”, you should definitely lock your rate to prevent any increases that could actually limit your ability to complete the purchase. It simply is not worth this risk when you can avoid it.
|Jennifer Mathes, Ph.D.|