Buying a home is one of the most rewarding and exciting things you can do, but that doesn’t mean that it’s stress-free. For many, finding the perfect home also means finding the ideal interest rate, and with more and more people looking to become new homebuyers, this is something we see our customers deal with day in and day out. In fact, locking in your rate is now more important than ever. Due to supply demands, especially here in Florida, new construction is taking longer to build, so having the ability to lock in your rate for a year is an incredible benefit. So, how do you find your perfect home and also lock in the perfect rate? It may be easier than you think.
All About Interest Rates
Mortgage rates are not an exact science and are influenced by various factors such as personal credit, location, loan amount, length of the loan, supply and demand and inflation. While many lending institutions offer a range of rates, final interest rates are greatly determined by the applicant’s personal financial situation.
What is an Interest Rate Lock?
Because a variety of factors come into play regarding mortgage interest rates, a rate lock or lock-in rate can help ensure it doesn’t change between the time you receive it and closing day. Placing a lock on your mortgage loan means that your interest rate won’t change between the offer and closing and protects homebuyers against rising or fluctuating rates. Because the interest rate, loan term and loan amount all factor into the loan’s monthly principal and interest payment, locking an interest rate will help determine the final monthly payment. As long as there are no significant changes made to your application, such as a change in credit score, or the kind of loan applied for, you can rest easy knowing your home won’t be costing more than you can afford.
Rate locks are typically available for 30 days, 45 days and 60 days, but according to Paul Miller, VP and North Florida Area Manager of SouthState Bank, some buyers may be able to lock in their rate for an entire year. “Certain loan programs offer a 12-month interest rate lock for homebuyers, which sets a ‘ceiling’ on the interest rate for a full year,” Miller explains. “This helps protect buyers from rising interest rates, and should interest rates decrease lower than their locked ‘ceiling’ rate within 30 days of closing, the buyer can also obtain a lower rate.”
The Current State of Interest Rates
Mortgage interest rates are tied to the basic rules of supply and demand – factors such as inflation, economic growth, the Federal monetary policy and the overall state of the housing market all play a role in determining the suggested rate for buyers applying for a loan. “Within the last year, we saw 30-year fixed interest rates fall at their lowest,” says Miller. “The Federal Reserve has been purchasing around $40 billion in mortgage-backed securities (MBS) per month, helping to keep rates relatively low. However, if they begin to reduce their MBS purchasing, we could see rates begin to rise.”
Working with MasterCraft
Here at MasterCraft, we know that part of building your dream home is making sure the price is right. That’s why we work with preferred lenders to help ensure your loan is ready when you reach closing day. “There are many benefits that preferred lenders bring to the table,” explains Miller. “Not only will the homebuyer receive a credit toward their closing cost equal to 2% of their loan amount, but both the lender’s staff and builder’s staff will work together to conduct construction updates to streamline the buyer’s experience before closing better.” MasterCraft provides three preferred lenders for buyers to choose from to provide a stress-free and efficient experience.
In addition, it’s important to note that new home construction does not play a role in determining interest rates, so there’s no reason you shouldn’t build the home of your dreams! MasterCraft’s history working with each preferred lender makes us confident in referring our buyers time and time again. With cutting-edge technology, catered assistance and personalized loan programs, you’ll feel satisfied knowing that everything has been taken care of by the time we hand you your keys.
Ready to start building your dream home? Contact us today or visit mastercraftbuildergroup.com to learn more.