Lenders typically ask that you are well into the approval process and likely to be approved before they are ready to lock an interest rate for you.
This means they have run your credit information and seen income and asset documentation that gives them the confidence to spend more time and resources on you. Some may require full approval before they are willing to lock your rate.
Another thing they will ask for is a signed real estate contract. People could spend months looking for and finding a home and even more time after that getting to the closing table.
Rate locks are time-sensitive and cost lenders money to put into place, so lenders want to be sure you have both enough interest in a property to sign a contract on it and enough interest in the lender to commit to following the loan to completion.
So, when is the right time to lock your interest rate? The answer is when you are eligible and have a rate that you are comfortable locking in.
After you lock your rate, you are protected from rate increases, but you may be unable to relock should the rates go down. Of course, everybody wants the very best rate, but nobody, including lenders, can predict what rates will do.
It’s best to remain in close communication with your loan officer and real estate agent to determine the best time to lock your rate during your home purchase.
If you have additional questions about rate locks, please give me a call. I’m happy to help.