When you decide to purchase a new home one of the first items on your list of "to do's" will be to shop for a good mortgage lender who is offering a low interest rate, low points and low fees. When you find one and begin the loan process you want to be sure that the interest rate that lured you to the lender in the first place is the actual interest rate you will receive. In order for this to happen you must instruct your loan representative to "lock-in" your mortgage interest rate. In other words you make a verbal and/or written agreement that this is the rate you will agree to pay for your mortgage loan. By failing to do this one important step - you could cause your interest rate to close higher than you anticipated since interest rates change on a regular basis.
You must also be aware that the mortgage lender is only responsible to hold or promise you the proposed interest rate for a certain period of time - just to get you through the loan approval process and to the closing table. This can be anywhere from 30 to 90 days. It would benefit you to work closely with your loan representative and make sure that your required paper work is in order - do everything you can to make sure your files are organized and up-to-date. Call the loan rep regularly to see if they need anything or if everyone is responding on a timely basis to any requests - such as verifying employment for example.
So what's the downside of "locking-in" in your interest rate and points?Well since the market rates are based on a number of factors - such as oil and gas, energy, the Stock Market, overall health of the economy, etc the interest rate could actually go down. If this happens - talk to your lender and see if the company would be willing to offer you the lowest rate possible for your mortgage - it never hurts to ask and could save you significant dollars.Lisa Zapalac
Casa Nueva Guide
There is no rate guarantee for a pre-qualification loan request. You will be qualified at the current interest rate in effect at time of loan application.
The interest rate on savings can be as high as 2.5% in the UK, despite the extremely low national interest rates. If one is willing to lock their money up for longer, e.g. such as a bond, they might get a higher rate.
The only way to hedge against declining interest rates is to lock in interest rates while they are high. While stocks and mutual funds vary constantly, CDs and annuities lock in an interest rate at the time of purchase, so they are not affected by declining interest rates in the future.
The interest rate of a Wachovia home equity loan varies greatly. The rate can change from day to day, depending on the market value on the day you apply. If you are interested and it is a low rate, that is when you should "lock in" your rate.
If you believe that interest rates will be going down in the future, the best thing to do is to invest now in a product that allows you to lock in an interest rate long term. You may not have easy access to the money, but you will be earning a high interest rate compared to what will be available in the future if you are correct.
There is no rate guarantee for a pre-qualification loan request. You will be qualified at the current interest rate in effect at time of loan application.
The interest rate on savings can be as high as 2.5% in the UK, despite the extremely low national interest rates. If one is willing to lock their money up for longer, e.g. such as a bond, they might get a higher rate.
The only way to hedge against declining interest rates is to lock in interest rates while they are high. While stocks and mutual funds vary constantly, CDs and annuities lock in an interest rate at the time of purchase, so they are not affected by declining interest rates in the future.
The interest rate of a Wachovia home equity loan varies greatly. The rate can change from day to day, depending on the market value on the day you apply. If you are interested and it is a low rate, that is when you should "lock in" your rate.
If you believe that interest rates will be going down in the future, the best thing to do is to invest now in a product that allows you to lock in an interest rate long term. You may not have easy access to the money, but you will be earning a high interest rate compared to what will be available in the future if you are correct.
If Ted wants to buy a house and believes that interest rates will rise, he should apply for a fixed rate mortgage.
Nominal InterestA nominal interest rate is the interest rate that does not compensate for inflation. This is used in relation to "effective interest rate" or "real interest rate."" Real Interest Rate = Nominal Interest Rate - Inflation Rate " Improvement suggested by Palash Bagchi.
A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.
A real interest rate and a nominal interest rate are quite similar. The only real difference between the two interest rates are that a nominal interest rate include the cost of inflation where as the real interest rate does not.
Annual Interest Rate divided by 12= Monthly Interest Rate
A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.
Let i = annual rate of interest. Then i' = ((1+i )^(1/12))-1 Where i' = monthly rate of interest