Rising Rates While You’re Under Contract

You have options to safeguard yourself from fluctuating rates.


The Federal Reserve has increased rates multiple times this year so far and will continue to do so throughout 2022. That means if you’re in the process of buying a home, the rate your lender quotes could increase sometime in the future. So what happens if interest rates increase after you’ve already gone under contract? Is there any way to protect yourself?

First of all, when we’re writing an offer with a financing contingency, we typically determine whether your rate is fixed or variable and what terms would allow you to cancel the contract. In a rising market like this, you should get a mortgage rate lock as soon as possible in the process to prevent your rate from increasing further. Some lenders have products that let you lock before your offer gets accepted, but you may have to pay a higher interest rate to do this.

 

“Float-down options typically come with an extra cost in exchange for a lower rate.” 

 

Second, ask your lender if they provide float-down options, which prevent your rate from rising but allow it to lower if market rates begin to fall again. Be advised, though, that float-down options typically come with an extra cost in exchange for a lower rate. 

If you have any questions or would like to learn more about mortgage rate locks and float-down options, don’t hesitate to give me a call or send an email. I’d be happy to help you.

Leave a Reply

Your email address will not be published.