Question #1

Question:

I'm about ready to become a homeowner, partly because mortgage rates are so low and it looks like a good time to buy. But I'm concerned about some of the recent ups and downs in mortgage rates. Could I get stuck with a rate that's higher than I planned for? Is there anything I can do if I'm in escrow and rates jump suddenly?

Answer:

Yes, there is something you can do to protect yourself in a mortgage market that has experienced some sudden ups and downs: Choose your lender carefully. Many lenders offer a 30-day or 60-day lock-in period for mortgage rates, a
provision that gives you some control over the rate you will pay for the next 30 or so years.

Typically once you qualify for the loan, you get a set period during which to lock in a good mortgage rate. Once you lock in that rate, it remains your mortgage rate until the lock-in period expires, usually 30 or 60 days. You must close your deal within this period or you lose the rate or pay a premium to keep it. Some lenders will even let you change your locked-in rate during the lock-in period if mortgage rates fall.

It's important to shop for a loan that gives you this kind of control, if that's what's important to you. Review the loan documents carefully to make sure you're getting what you've been promised. Be prepared to meet all the requirements in the fine print to make this provision work for you. Then start watching mortgage rate trends.