LOCKING IN YOUR INTEREST RATE

Michael Holigan: You can make sure today's interest rate is the one you get when you close on your loan. It's called "locking in". Once you lock in your rate it doesn't matter what the economic fluctuations are. You're guaranteed that rate. John Edwards did not like what he saw in the news. Interest rates were rising at the exact time he was building his house. He was worried about how high the rate would be by the time he closed.

John Edwards: Of course we're all interested in having the lowest payment we can have, so the rate, interest rate is a big part of that. So, the lower rate you can get the lower the house payment will be.

MH: John went in and locked in his interest rate before he ever bought a home. With the bond market going up and down insuring your interest rate remains the same can eliminate a lot of worry, plus it can save you thousands of dollars over your mortgage lifetime. Plus, if you're qualifying for the maximum home you can afford an increase in interest rates can knock you out of that house. Your lender will lock your interest rate 60 to 90 days before you close free of charge. If you're considering locking for a longer time you may want the added flexibility provided by either a lock float-down or a range protector. Both options allow you to take advantage of rates if they fall once you've locked. In exchange you'll pay a tax-deductible fee of about one to one and a half percent of your loan amount. Regardless of how you do it, locking in your interest rate can bring tremendous savings. Say your mortgage is for $95,000. If interest rates are seven and three-quarters percent when you lock and rise to eight and three-quarters percent by the time you close locking in at that lower rate has saved you nearly $1,000 the first year alone. For the Edwards the savings will help afford some pleasures of home ownership.

Judy Edwards: I'm anxiously looking forward to working in a yard getting everything fixed up the way we want to do it. I really love to do that. I just have a lot of pride in where we live.

MH: A financial expert or your lender can help you determine when locking in is right for you.

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Purchase Video

Episode 64 1997 - 98 Season

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