Saving money on your Florida mortgage interest rate can be as simple as choosing a different closing date.
It really all comes down to how and when you commit to your mortgage loan rate lock.
A Rate Lock Commitment represents your lender’s promise to honor a set mortgage rate for a set time period. Essentially, your mortgage lender is looking into the future as best it can and agreeing to fix your mortgage rate for a period of days prior to your loan closing.
No one has a magic crystal ball, so the “future” we see when it comes to what mortgage rates will do represents an educated guess at best. For this reason, it makes sense that the more time your lender gives you for your rate lock, the higher that particular interest rate will be. Your lender must compensate for “time risk”.
How Rate Lock Time Periods Map Out
Normally, rate locks are offered in 15-day increments, with the 30-day lock acting as the basis for all other pricing:
- 15-day rate lock : 1/8 percent lower than the 30-day rate lock
- 30-day rate lock : The basis for all other pricing
- 45-day rate lock : 1/8 percent higher than the 30-day rate lock
- 60-day rate lock : 1/4 percent higher than the 30-day rate lock
None of these figures are set in stone. Spreads between rates can (and do) vary from lender-to-lender. However, the rate lock periods listed above are pretty accurate.
What a Difference a Day Makes
Choosing a closing date is very important to your mortgage rate. It is quite possible that a 45-day closing may reduce your rate 0.125% over a 46-day one.
Assuming a $250,000 home loan near today’s rates, you’re looking at saving about f $236 every year of your loan.
When you and your Realtor are negotiating the contract on that home you want to buy, keep in mind how rate locks work to make sure you get the best rate possible. The shorter the length of your rate lock commitment, the more money you might save long-term.
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage broker, I’m your guy. Call me at 863-604-3019 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!
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