The #1 Factor Driving up your Mortgage Costs- Time

The #1 Factor Driving up your Mortgage Costs- Time

Time is not on your side when it comes to purchasing a home.  Borrowers are often confused about what rate to lock in, and therefore get punished when rates rise.

What is a home Rate Lock? This is what happens when a lender sets your borrowed amount aside under certain terms.  If you can’t deliver on the set terms a rate-lock extension can occur and this can become expensive – fast. If you know your file is going to be complicated (for instance) you may want to set up a 45-day-lock instead of a traditional 30-day-lock to compensate.

Rate locks can be expensive, because the lender is essentially taking a chance on you by locking in your interest rate.  For instance,  if you were to lock in a loan at a 5% interest rate, and then the rate jumps to 5.5% the lender is going to lose money on your original lock.

For this reason, and others, be sure to get your paperwork to your lender as quickly as possible – even if it seems over the top.  You must enter the home buying process with the thought that you are an on-call professional. If this is your mindset,  you are more likely to close on time and keep consts under control.

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