New Construction: Long-Term Mortgage Rate Locks

Long-Term Mortgage Rate Locks for Newly Constructed Homes

When you purchase a home that’s being newly constructed rather than an existing property, there are some key differences to consider. When you purchase an existing home and get financing, you know what your rate is right away. With new construction, your home may not be ready for months after you select a home you want. Mortgage rate locks are an agreement from your lender to honor an agreed upon rate when your home is ready. The mortgage professionals at Boise River Lending offer long-term mortgage rate locks for newly constructed homes in Boise, Meridian, Twin Falls, Treasure Valley, and Magic Valley, ID. Contact us to discuss your needs and see what lending solutions we can provide.

Mortgage rates fluctuate in the Boise housing market and nationally based on several factors. The passing of just a few months can mean that interest rates we offer today could change by the time you close at the completion of construction. There are both short- and long-term mortgage rate locks for various needs. Long-term mortgage rate locks are often used for newly constructed homes.

The Basics of a Long-Term Mortgage Rate Lock

The rate for a mortgage rate lock is usually the same regardless of how long you maintain the lock. However, it’s important to note that there is a fee, sometimes also called discount points, associated with a long-term mortgage rate lock. That fee typically increases the longer the lock is maintained.

Mortgage rate lock lengths come in 15-day increments. For a home under construction, some clients require a lock for 6 months or more. The longer you maintain a mortgage rate lock, the higher your discount points will be. It’s recommended to lock your mortgage for as short of an amount of time as is required, but you should have some cushion in case an unexpected event delays closing. In some cases, we can extend the lock, but in others, you may end up paying more to lock in a new rate with new discount points.

The Risks Associated with Long-Term Mortgage Rate Lock

Once your home is completed and you are ready to close, you will pay the interest rate agreed upon in the mortgage rate contract. There are a few potential cons to consider for a mortgage rate lock. If current market interest rates are lower than the rate you have locked in at the time of closing, you likely will have to pay the higher rate. Likewise, if the lock expires and cannot be renewed, you will be subject to current interest rates.

Our Experience Can Help You Lock in the Best Rates

The mortgage professionals at Boise River Lending work closely with clients to understand and anticipate any changes that might arise during a mortgage rate lock. Once we know more about the property you wish to purchase and work with your Realtor, we can help you determine when and how long the closing process will be. We work with clients in Boise, Meridian, Twin Falls, Treasure Valley, and Magic Valley, ID. When you’re ready to get a personalized quote for home financing and learn more about long-term mortgage rate locks, contact us.