• 4 Things to Remember When Locking in Your Mortgage Rates • April's Home Value Improver • About Us

4 Things to Remember When Locking in Your Mortgage Rates

Watching interest rates fall can give you feelings of encouragement - or panic. Everyone wants the lowest rate possible, so the desire to "lock in" at the precise moment that rates are at their lowest can drive people crazy.

Everyone wonders, What if I lock in now and the rates go lower tomorrow? Or, what if I don't lock in today and the rates go up? It's enough to make a sane person crazy with worry. However, if you keep the following four things in mind, you just may hold on to your sanity and get a great rate at the same time.

  1. Your lender guarantees the rate on your loan even if market rates change.
    Mortgage rate "lock-ins" can also be called a "rate-lock" or a rate commitment. Usually, a lock-in will only be for a certain time period. Once you "lock in" your rate, your lender cannot change it if there is variation. So if you start the mortgage process with the plan for a 30-year-fixed mortgage at a rate of 4.7%, you are guaranteed that rate when you close.

    That is, however, dependent upon closing within a certain number of days. Each lender has different rules around rate locking, although a 30- to 60-day period is typical. It's important to remember that there are certain things that are not in your control, and those can result in you losing out on a rate. One refinance client recently lost out on her locked-in rate when her bank dragged its feet on getting a certain letter to the lender about her home equity line of credit. Some lenders may charge a fee for locking in a certain rate, while others may not.

    It's also important to rememer that your mortgage rate is dependent upon the appraised value of your home and your income staying the same or increasing. The banks base your rate on your credit scores, your appraisal, and if you are taking cash out or simply refinancing an existing balance.

  2. Rates may go down after you lock in.
    A modern day Hamlet may ask "to lock or not to lock," when talking about his mortgage and the answer would be a very modern-day "it depends." One important thing to remember about locking in is that you should not take it too lightly. It really means "lock," so if rates go down and you want to take advantage of them, you are out of luck. So, don't lock unless you are really ready to do it.

    On what does it depend? It depends on what the Federal Reserve Board is doing. Are rates going up or down? If they're going down, you want to give yourself maximum flexibility by not locking in. If, however, they are on the rise, you'll want some assurance that you'll get the best rate possible so lock away!

  3. Consult with financial advisors for trends.
    If I had a crystal ball, I could tell all my clients exactly what to do when it came to their rates. In the absence of a crystal ball, I do have something that may help you: the knowledge of what has been done in the past and how well it has worked. When you are looking at locking in your rate, talk to me about the way trends are going.

  4. Don't make yourself crazy.
    While it can seem like the stakes are very high because you may have your new loan for a long time, it's important to deal with real facts and figures, not just your emotions. Sure, a quarter point makes a difference, but how much of a difference depends on many factors. I've seen clients get very upset about going from one rate to another, and it turned out that the monthly difference was only $20. If your mortgage payment fits your budget and the closing costs are reasonable, then lock and move on - especially if you are working within a specific time frame in order to close on your home.

April's Home Value Improver

5 Spring Cleaning/Organizing Projects

If you are the type of person who empties out your kitchen cabinets every spring to clean and reline, you are probably all set for spring cleaning. Head on over to The Container Store and buy some organization tools for the already organized. For the rest of us who like the "spring" but not the "cleaning," in this term, listen up. You are not off the spring cleaning hook, but we can make this easy and (somewhat) painless by identifying 5 problem areas in your house.

  1. Clean out your closet.
    Yes, it would be "nice" if you could fit into those size 6 jeans again, but they have been taking up valuable closet real estate for 8 years now. If you really drop enough weight to fit into your dream size again, won't you want new clothes, instead of wearing those old ones? Good-bye, old jeans. Take a ruthless approach. This will benefit you in two ways. First, it will get more old clothes out of your closet. Second, the cleaning process will go much faster, and you can sit down with a bowl of ice cream and watch reality TV sooner than you would if you debated each article of clothing.

  2. Clean out some junk drawers.
    The smaller houses of yesteryear often had a junk drawer in the kitchen. Today's larger houses have several junk drawers. Take the same ruthless approach. Get rid of the actual junk. For the items you want to keep, do some categorizing. (This will be the only "organizing" task I ask of you. Promise.) Maybe one drawer can be for gift bags, cards, and envelopes, and another can be office supplies. Your junk is individual to you, so I can't tell you exactly what to do - just create some categories.

  3. Put together some photos.
    If you are like most people, you have hundreds, if not thousands, of photos living peacefully on your hard drive. They rarely see the light of day. Who can blame you? Sifting through the junk photos and finding the best ones is a big, huge job, as is putting them together in some big, album. One client of mine is having good luck with Picaboo. It reads when the photos were taken and puts them in folders based on their dates. She has made a summer 2010 album and an autumn 2010 album.

  4. Spruce up the front entrance.
    It doesn't take much to get to the garden store and get a pretty planter for the front doorway and a new welcome mat. A general clean up will greatly improve the much-discussed "curb appeal."

  5. Comb through the bookshelves.
    I never said this would be easy. Go through your old books and get rid of the ones you won't be reading, rereading, or lending out anytime soon. Most cities and towns have book sales to raise money for the library, so they will be easy to donate.

Westchester Mortgage

April 2011

Are you on the market for real estate this spring? With mortgage rates still low and spring inventory expected to be in decent shape and priced well (many sellers have used the down economy and tough winter to repair and renovate before putting their homes on the market), there should be some great buying opportunities.

Make sure, though, that you have your finances in order before you shop. It takes longer than it used to for a mortgage approval and few sellers will accept an offer from an unqualified prospect. If you want to be ready to bid, take the time now to get approved.

I love answering your home financing questions. Feel free to reach out anytime!

Best regards,
Debbie Siegel
Westchester Mortgage

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