When you apply for a mortgage, you will be given a rate, but that rate is for that day only. Unless you also close on that same day, which is unlikely, you have to take a chance on the interest rate being higher when you eventually close.

But lenders today frequently offer their clients a lock in period for their loan at the time of application. They realize that it may take some time before your house is chosen and actually closed on. Many people count on the interest rate when they calculate how much their monthly mortgage payment will be. Locking in a rate for a length of time frequently proves to be a good idea for a borrower. You can lock in either or both points and rates.

You should be able to lock in the interest rate and points either when you apply for the loan, during the processing of the mortgage or when the loan is approved.

Perhaps you have the opportunity to lock in 5.5% interest with one point for 30 days. What this gives you is the right to keep that rate, even if you do not close on the loan for an additional 30 days. This thirty day period is the norm, since getting all the paperwork done may take that long. Banks are not likely to give such a guarantee for greater than 30 days, because of the greater chance of rates increasing, unless the borrower pays a premium.

This is a two way street, because if rates go down, you may want to cancel it, but the agreement must allow for it. This agreement is agreed upon when the lock in period is set.

After the 30 day period, of course, the rate will revert to whatever the prevailing market rate is. If rates have not changed, you may be able to extend the lock in period.

You can have a combination of lock ins:

Rate is locked, points are locked. In this case, the lender will hold both the rate given and any points quoted.

Locked in Rate, floating points. The bank may choose to protect itself by setting a fixed base rate for the lock in period, but maintaining the right to change the points to keep the rate. This permits them to charge more points if they want.

If you are in a period of extremely volatile interest rates, it may be well worth your while to have a lock in term, even if there is a charge for it.

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If you are considering buying a house or refinancing your present home, you probably are asking yourself if this is the right time. If you think rates will increase, you want to buy now before they do, but if you think they are going to go down, you may want to delay your purchase and take advantage of lower rates.

How are these interest rates fixed in the first place, and will understanding that help in the decision making process? If you look upon interest rates as the price of money, and realize that factors like supply and demand influence all prices, you can see how the “”price”" of money can even affect your mortgage.

Inflation is one of the very important influences on interest rates. The inflation rate has two major indicators. These are the PPI and the CPI, the producer price index and the consumer price index.

PPI is the measure of differences in prices in a given period for goods at the production level. If PPI is rising, this will mean that the cost of finished goods is higher, which will lead to inflation.

CPI, or Consumer Price Index is the difference in prices at the consumer level, as measured by a standard basket of goods. It is considered the most important component of inflation, since rising prices that consumers pay for goods are the basis of inflation. Often, to remove some of the volatility of the CPI, analysts will look at core inflation, which removes energy and food prices from the formula. What remains is considered the “”core”" inflation rate which is a better indicator of general prices and inflation.

Gross Domestic Product is an additional inflation, and therefore interest rate, indicator. The Fed (Federal Reserve Bank-the Central Bank of the United States) is responsible for maintaining the economy on an even keel-not a lot of growth, which will cause inflation and not too little, which will cause a recession. The Fed has the power to intervene in the economy in a number of ways so that it can decrease rates to slow the economy down and increase rates to speed it up.

An additional important indicator is the unemployment rate. Low unemployment tends to lead to inflation, since it leads to higher wages which will lead to higher prices. If unemployment is up, the resulting decreased wages will mean inflation will be down. Higher wages lead to price spirals while lower wages lead to prices falling.

If you are considering a mortgage, it is to your advantage to watch these indicators to find the best timing to enter the mortgage market. The bigger picture to watch out for is a lower GDP with unemployment which leads to lower rates. Higher GDP with low to no unemployment signals a road to higher interest rates.

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Well, when you are buying a home, no? This is usually true, but you can improve your chances of obtaining a home loan by timing some important steps.

Let’s look at the reasons this is so. Just about everyone today is cognizant of what a credit score is. Even if you do not realize what your own score is, you know that it is an important measure of whether you receive a mortgage\loan and what rate you will pay for it. Influencing your credit score can make a difference in your home loan.

So if you have decided that you want to start thinking about buying a house, now is the time to take some steps about the credit rating.

There are some important factors that will influence your credit rating. This score is a number that credit institutions apply to borrowers to measure their credit worthiness. It takes into account many factors, such as when his bills are paid, how many credit lines he carries, what his salary is and how long he has been with the same company.

If you can improve some of these important factors, you can improve your score. Here are some steps to take to improve your chances.

If you haven’t always paid all of your bills on time, now is the time to start. You can’t change history, but if a bank sees that you have improved your ways, your new conduct may help you in obtaining a loan.

Now is not the time to take on new credit card debt. Even a line of credit that have no balances are frowned upon by bankers because of their potential for use. Taking advantage of 0% rates, or store credit cards that offer percentage off for a new account will probably not make up for the higher mortgage rate you will receive.

The next factor to think about is how much total credit card debt you posses, and try to lower it.

You should not consider changing jobs when you are considering applying for a home lona. Job stability is a big component of your credit score, since it means you will continue to have income. In a new position, you may be the low man on the totem pole and the first person to be let go in a downturn, making it difficult to pay bills.

Another job decision that can influence your mortgage is retirement.

Regardless of whether you have enough retirement funds, a bank prefers to see a salary before issuing a mortgage. Refinance your home or apply for a mortgage for your retirement home before retiring.

You may not be in a position to make these adjustments to your life, but if you can take steps such as this, you will be able to make sure it is a good time for a mortgage.

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