Understanding Rate Locks in a Hot Housing Market

Couple with a New Home Consultant in a Stanley Martin Home.
  • Written on May 19, 2022 By Stanley Martin Homes

When you buy a house, a lender usually sets an interest rate and mortgage term to help determine your monthly mortgage payment. If the interest rate goes up or down, that monthly payment changes. Rate locks help provide important stability during the homebuying process, allowing you to plan what you will spend each month on your mortgage.

What is a Rate Lock?

A rate lock is a lender's guarantee that a mortgage's interest rate won't change between the time a borrower is approved for a loan and when that loan closes. There is a fee associated with a rate lock. Talk to us today about our current incentives to help you purchase a rate lock.

When is the best time to lock in a rate?

The best time to lock in your rate depends on what you're buying and when you plan on closing and moving in. If you are concerned about current interest rates, a rate lock may be a good option because of the security they provide. Though rate locks protect you from rising rates, they also keep you from rates that go down. You may be able to "float down" your interest rate or move to the lower market rate, but that option is only available once for the life of the loan.

First Heritage Mortgage is offering rate lock periods to fit the needs of each buyer. Locking in a rate only guarantees that you'll get the specified interest rate if you close within a specific time period. If you don't close within that time frame, the rate will float to the current market rate which may be higher or lower than your rate lock.

Extended Rate Locks

If the home you are purchasing is not yet completed, and a standard rate lock period may not be enough, you may need a longer rate lock timeframe to protect your interest rate.

Rate locks help protect buyers from fluctuating market conditions. They provide peace of mind during the homebuying journey. In partnership with First Heritage Mortgage, Stanley Martin's SMart Financing offers a range of financing options so buyers can feel confident in their new home purchase.