Locking in interest rates

Q. Why would I need to lock the interest rate on my loan?

A. Locking-in the loan’s interest rate (making sure that the rate is available on the closing date) is a matter of preference. If financial newspapers and broadcasts talk about volatile interest rate conditions, or keep mentioning that interest rates may be headed up, as they are now, locking your loan rate would give you the peace of mind of knowing that your loan payment obligations will not increase if rates surge higher. Such a decision would only make sense, however, if the fee were reasonable. A lender may or may not charge for this service. If your lender does charge a fee, the fee will vary depending on how long you wish to guarantee the interest rate. Would it be 30 days or 60 days? You also need to consider how an increase in rates would affect your ability to meet your monthly mortgage obligations.

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