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Unlocking the Rate Lock Mystery
Unlocking the Rate Lock Mystery
 
Everyone who has financed a home with a mortgage, either for a purchase or refinance, has probably struggled at some point during that transaction with the dilemma of locking or floating the interest rate.  This critical decision does one of two things:
 
Commits both the borrower and the lender to a specific interest rate for a set period of time.  This “for better/for worse” proposition means that if rates move up or down, the commitment cannot be broken.  This action is known as “locking” a rate. Leaves the interest rate open to future market fluctuation, again for better or for worse, until the rate is locked.  This is known as “floating” the rate.
Because I am no better a forecaster of market events than anybody else (although I would argue I am more informed about forces that can influence mortgage rates --- after all, that is part of my job), the scope of this article will not be to advise you on what to do with your loan in process.  Rather, I hope to provide a primer on the mechanics of rate locks, some insight into important facts to consider and also some perspective on how to ... more

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