Interest rates are constantly fluctuating, so when you first meet with a mortgage broker and she tells you she can get you a 6 percent interest rate on a 30-year mortgage, that rate is only good for today. If it takes you 6 months to find a property, rates could have risen or fallen significantly by then. You won’t know the actual rate you’ll be paying until you lock it in, which can be free or cost a few hundred dollars depending on how long you want to lock the rate for.
Typically, buyers will lock in an interest rate shortly after signing the P&S and a closing date has been agreed to. The rate should be locked at least until the closing date, because that’s when you officially take out your mortgage.
However, you don’t have to lock in your rate after signing the P&S. If you think rates will drop between the P&S and the closing, you could wait to see if rates go down. There’s a risk—rates might go up! If they go up significantly and you’re already stretching your finances, it could put your deal in jeopardy. For this reason, I suggest leaving interest rate predictions to professional investors, and lock in the mortgage after the P&S.
