Explaining Rate Holds
June 15, 2023 | Posted by: Keith Leighton
Explaining Rate Holds
Every potential buyer should be familiar with the term “rate hold”, especially if you have worked with us previously.
Home buyers who need a mortgage to purchase a new home can typically get a rate hold from lenders. The rate hold will guarantee your mortgage application's interest rate generally for 90 to 120 days. It usually doesn’t apply to mortgage refinancing, but is intended for clients who are looking to purchase a house or secure a new mortgage.
When your application is completed, we can submit your application to a lender that has a rate hold at an interest rate available to you without specifying a particular property.
A rate hold works like this: For example, on day one you submit your application to a lender for a fixed rate of 4.84% for five-years. If within the rate hold period, the interest rate increases to 6.54%. As long as your mortgage closes within the rate hold period, you are protected and can keep your lower rate of 4.84%. Also, if rates happen to drop lower than the 4.84% rate hold then you would get that lower rate.
This rate hold does not oblige you to work with that lender or us and it won't hurt your prospects for an approval later on! It only does one thing, it safeguards the interest rate you have agreed upon, allowing you to shop the market for your perfect home without worrying about the rate going up.
When the 120 days is up, if you haven't found your dream home or prefer different interest rates, you're free to submit for another rate hold! It will reflect the rates that are in effect at that date.
If you're thinking of buying a new or second home this summer, don't hesitate to contact your DLC Ideal Mortgage expert to begin the pre-approval process and secure your rate!
