Lock in your rate.
A rate lock freezes an interest rate on a mortgage for a period of time. This is simply an agreement between you – the borrower – and the lender to lock in an interest rate for a set period of time (typically 30, 60, or 90 days). If rates rise during your lock period, your rate stays the same, giving you peace of mind in an ever-changing market. Without locking your rate, you risk paying a higher interest rate as rates continue to climb.
Invest in mortgage points.
You can pay a fee directly to the lender at closing to, essentially buy a discount on your interest rate. This is what’s called a mortgage discount point. One discount point costs 1% of the loan amount. For example, on a $200,000 mortgage, one discount point is $2,000. Generally, you can expect that paying one point will take off about an eighth of a percent from your interest rate. While an eighth of a percent doesn’t sound like much, investing in points means you save every month on your mortgage payment and thousands over the life of your loan!
Opt for an ARM.
With an ARM (adjustable rate mortgage), you can lock in a lower interest rate than a fixed-rate mortgage, typically for the first 3, 5, or 7 years. After your introductory period, your interest rate will rise and fall according to the economic climate but rate and payment caps protect you from drastic fluctuations. A lower interest rate means lower monthly payments. Now is the time to take advantage of the savings!
So, when interest rates start creeping up, instead of drowning your sorrows in a pint of Cherry Garcia, talk to a Personal Loan Consultant. Our Personal Loan Consultants can help you secure the best interest rate and find a mortgage that you can comfortably manage.