What does "Rate lock" mean?

Locking in a mortgage rate is beneficial if you anticipate rising interest rates. A rate lock protects your mortgage rate from fluctuations between application and closing, potentially saving you money. However, if rates drop after you lock in, you won't benefit from the lower rates. Assess market trends and your financial situation before making a decision.

If you lock in a mortgage rate and it goes down, you will still pay the locked rate unless your lender offers a float-down option. A float-down option allows you to adjust to the lower rate before closing, but it often comes with specific conditions and fees.

Mortgage rates are influenced by economic conditions, inflation, and Federal Reserve policies. As of now, rates are significantly higher than 3%, and while it's uncertain if they will return to that level, analysts suggest it could take years for rates to drop back to such lows. Historical trends indicate that rates fluctuate based on these factors.

A 1% increase in interest rate can significantly impact your mortgage payments. For example, on a $300,000 loan with a 30-year term, a 1% increase raises the monthly payment by approximately $180, resulting in over $65,000 more paid in interest over the life of the loan.