November 27, 2023
In November 2023, mortgage loan rates came uncomfortably close to the 8% range. Since then rates seem to have backed away, with incremental improvement. Is this the time for some house hunters to make their move?
The short-term gains mentioned above may benefit anyone ready to make a deal. But what about those who need more time? In such cases, you should not read too much into these rate adjustments until there’s a longer history of consistently lower rates.
FHA Home Loan Mortgage Rate Trends
Day to day or week to week, home loan rates can alternate between trends moving suddenly higher or lower, but over the long term, such moves won’t mean indicate much until there is a consistency in the rates over a longer period of time.
For example, in October 2023, mortgage rates were reported as high as 8%. But that 8% rate didn’t persist, a short term increase only.
Soon after, mortgage rates moved back into the 7% range. There was no long-term effect from the rate hitting that high.
You may find rates changing like this by a few increments each day or week. Does that mean much until those trends are reinforced by longer periods at similar rates?
Mortgage Rate Protection
Some read the above and wonder how to protect themselves against rate changes.
The right time to get ready to discuss specifics about locking the home loan interest rate you are offered to protect it from any changes on the way to closing day? When you are ready to make a serious offer to a seller.
This is called a mortgage rate lock commitment. You and the lender agree to an interest rate which is then locked in until the agreement’s expiration date.
Your lender is permitted to charge a fee for this rate lock. You want to know the fee amount for budgeting purposes but consider it an estimate only until the actual agreement is drafted.
Once you and the lender agree in writing, your interest rate is locked for a specific period.
The duration of that time is something you and the lender agree to. The lock cannot be offered indefinitely; it has an expiration date. In the case where your lock expires before closing day you may need to renegotiate the agreement with your loan officer.
What To Remember
Ask a participating FHA lender about your mortgage rate lock options as early as possible in the loan research stage. And remember, it’s ok to ask about the option early, but do not expect to be offered a specific lock commitment until the time is right in the mortgage process to apply.
Ask The Lender
Your rate lock commitment with the FHA lender can’t happen at the start of your home loan journey. It has a specific role the process, and you won’t be able to get rate lock protection until the time is right.
Interest rate lock agreements are a routine part of the home loan process. You’ll need one for an FHA loan or any other type of mortgage.
Remember to ask about rate lock policies when comparing loans, since no two lenders may have identical policies, so it’s wise to ask about the lender’s rate lock guidelines as part of the comparison process for your FHA mortgage.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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