The benefits of locking in a loan rate

If you’re planning to build a home this year, you might want to accelerate your home purchase. In addition to a fast-moving sales cycle for homes, the Federal Reserve has indicated it is likely to raise interest rates at least once in 2022, which means mortgage rates will start to creep up.

Planning ahead can help you save money on your home loan, which is why you may want to consider one of the following options:

• Rate Lock: Locking a rate means that you and the lender have made a commitment to your loan’s interest rate for an agreed-upon term, typically ranging from 14 to 60 days. We also offer a Builder 90 lock for your construction loan.
• Rate Buy-Down: Choosing this option allows you to purchase points — at an amount equal to 1% of the loan — to reduce the interest rate or lock in a current rate.

Locking your rate can save you a significant amount of money over the course of your mortgage, especially when rates are expected to increase.

The case for rising rates.

When inflation is high and the job market is strong, the Federal Reserve typically raises interest rates to help slow down inflation. “(Today) supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation,” the Fed reported.

Federal Reserve Chair Jerome Powell said policymakers believe they have “quite a bit of room to raise interest rates” without threatening progress on jobs or slowing the economic recovery that’s occurring. 

We’re here for you.

Please reach out if you have questions about the Fed’s rate increases, rate locks, or anything else related to your construction/permanent loan.