Options For Setting The Mortgage Term

Some of the options that lenders will offer you in establishing the point and the interest rate that you will be charged for are as follows:

Locked-In Interest Rate/Locked-In Points

What this option basically offers is that the lender will allow you to lock in the interest rate and the points that were quoted to you. This option is right for you if you want to secure those mortgage terms. By doing this you lock them in so that no mater how the market conditions change the rate that you want will remain constant.

Locked-In Interest Rate/Floating Points

When considering this option is it essential to know that the lender will allow you to lock in the interest rate however the points can either increase or decrease depending on what the market conditions are like. Simply put, if the market interest rates decrease during this time then the points may also fall. On the other hand, if they increase then so might your points. Even if you decide not to lock in your point, your lender might still let you do so at a future time before the settlement. However, if you do not lock in your points and the interest rates increase by the time you get your settlement then the lender could charge you a higher amount of point for the loan at the rate that you locked in. If this happens, then the advantage of you locking in your rate will probably be lost because the up-front costs will be greater.

Floating Interest Rate/Floating Points

With this option the lender will allow you to lock in the interest rate and the points after you submit the application but before the settlement. Nevertheless, if you suspect that the rates will drop or remain the same then you might want to consider waiting on locking in a certain rate and point. Since all this varies from lender to lender, make sure that you ask your lender about these rates and costs before making your decision.