Finances FYI Presented by JPMorgan Chase
By Aaron Allen
The Seattle Medium
As the Federal Reserve continues to raise interest rates, many new and first-time homebuyers are asking if now is the best time to lock in mortgage rates to help keep rising housing costs in their control.
In an effort to keep our readers informed, The Seattle Medium Newspaper sat down with Quincy Crawford, Senior Home Lending Advisor at Chase, to discuss how to navigate the home buying process, how increasing mortgage rates can impact your family’s homebuying dreams, what resources are currently available to homebuyers, and why it is important to lock in interest rates early in your process.
“There is no one size fits all approach to locking in mortgage rates,” says Crawford. “But there are many factors to consider when doing so and this is where senior home lending advisors such as myself can provide a more individualized counsel which is specific to your situation and of course the market.
“Given the volatility of the interest rates right now we recommend locking into the rates as soon as possible, so a client can be certain on what their payment will look like on their loan,” added Crawford.
The news about interest rates isn’t very good these days. Inflation has caused the Federal Reserve to raise interest rates to try to slow inflation, making the cost of borrowing money — which includes mortgage loans for prospective homebuyers – much more expensive.
With swelling mortgage rates linked with double-digit price gains, these characteristics are placing potential buyers and homeowners in a rough spot, with many first-time homebuyers being squeezed out of the market because they don’t have an additional boost from the sale of an existing property and/or equity that they can leverage to buy a home.
“Mortgage rates have nearly doubled in the last six months – from 3% in 2021 to more than 6% in 2022 – making it increasingly difficult for many Americans to purchase a home,” says Crawford. “That difference is significant by any measure, but it could result in hundreds of dollars added to your monthly payment and thousands of dollars over the life of your loan.”
When it comes to the purchase of a new home Crawford says that many people might be in a better position to buy than they may think, but it really is a matter of them getting the proper information to make that determination rather than just a gut feeling.
“Even with challenges, purchasing a new home may not be as difficult as one might think,” says Crawford. “Some of the biggest challenges for people who may not have gone through the mortgage process and locking in mortgage rates, is not understanding how their credit relates.”
Other concerns, according to Crawford, stem from customers wondering if they are getting the best deal and if they have the right support in order to find a home. While these are valid concerns, Crawford advises people to explore Chase Agent Express, “which allows you to have a vetted realtor” who can help make the process very easy for Chase clients.
“Despite a challenging homebuying environment with high demand and historically low inventory, purchasing a home is still attainable – and you don’t have to go through the process alone,” says Crawford. “Getting connected early with a home lending advisor will better prepare you for the homebuying process, help you understand how much home you can afford and get you prequalified so you can shop with confidence.”
“Chase offers a Homebuyer Advantage Program, which allows you to get conditionally approved while you shop for a home,” added Crawford.
While many people are trying to lock-in mortgage rates while interest rates are rising, there are also people who are concerned about locking-in to rates only to see rates fall before they purchase their home. It is for cases like this that Crawford says that its important for people to do their research and seek out the best product for their needs.
“There isn’t an exact science to timing the market,” explains Crawford. “While interest rates have risen in recent months, it’s always possible that interest rates could fall. Some lenders offer a mortgage rate lock float down, which allows you to lock in an interest rate with the option to reduce if market rates fall during the lock period. This option provides you with a little more security in a volatile market and allows you to take advantage of falling interest rates.”
“You may be able to move to a lower rate even without the float down option, but it may require additional fees,” adds Crawford. “Additionally, your lender may have particular requirements, such as being at a certain stage of the loan process, for the customer to be eligible to lower their rate.”
What happens if roadblocks occur such as late paperwork or homebuyers struggle to get financing, can a homebuyer potentially let the rate lock expire by pushing back their closing date?
“This is certainly possible,” says Crawford. “It isn’t likely to be beneficial for the customer. Oftentimes, lenders will only allow you to move forward with the rate you originally lock in – or the rate on the day you relock, whichever is higher.”
“The other thing to keep in mind is the ability to move quickly in this environment is critical,” says Crawford. “It’s essential to do your homework, your due diligence, on lender-backed resources available to you, such as Chase’s Closing Guarantee. This guarantee commits to closing customers in as little as three weeks, or they receive $5,000. The program offers buyers peace of mind knowing that they can close on their new home without delay or receive compensation that can be put toward additional costs.”
Locking in your mortgage rate can be a very important step in manifesting one’s dream of owning a home. A mortgage rate lock keeps your interest rate from rising between the time you apply for a mortgage and the time you close on your new loan. This option along with available resources allows borrowers to get the best mortgage rate possible while going through the refinancing or purchasing process and Crawford says there are a number of options including podcasts to help boost your homebuying knowledge – especially if you are a first-time homebuyer.
“As a home lending advisor, we are advocates for our customers,” says Crawford. “Our job is to really just navigate you through the purchase process from start to finish, make as seamless as possible, keep the customer informed on expectations and really to be the advocate for the customer if they have questions. We are there for those questions and the goal is to help them achieve their dream in the shortest period of time if possible.”
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