What happens if you lock in a mortgage rate and it goes down? If you're locked in and mortgage rates fall, you'll be stuck paying the higher rate unless your rate lock includes a float-down option. A float-down option lets you honor your locked-in rate or the current rate, whichever is lower.
Interest rates fall significantly on Wednesdays and increase on Mondays relative to the previous days, and stock market returns are significantly higher on Fridays (in the one-day settlement and full periods) and Thursdays (in the two-day settlements) than on other days of the week.
It depends on your situation. If you're buying a home and need to make a decision soon, locking in a good rate now might be wise to avoid missing out on the home you want. However, if you're looking to refinance, you could wait a little longer since rates are likely headed down further.
Benefits of Early Month Closings
Closing during the first weeks of the month offers certain advantages. For example, if you close on June 5, your first mortgage payment won't be due until August 1, giving you nearly two months before your first payment. Also, try to close on a Tuesday or Wednesday.
In our experience, Friday tends to be the most popular day of the week for clients to close. This means that your realtors and attorney will likely be busy that day, though there is nothing wrong with closing on a Friday.
Fridays are good for closing deals
A significant number of deals are signed on Wednesdays; however, this may be because that's the day of the week when sales reps are most active with their sales calls, mailings and meetings. No wonder more deals are closed when you really put in the extra effort!
So, what's the best day to lock a mortgage rate? MBSQuoteline data shows that rates are steadiest on Mondays, ideal for risk-averse borrowers, and most volatile on Wednesdays, which can offer lower interest rates for risk-tolerant borrowers but also carries the risk of higher rates.
The Federal Reserve on Wednesday announced its third consecutive interest rate cut of 2024, reducing its benchmark rate by 0.25 percentage points amid cooling inflation. Yet in a blow for borrowers, the central bank also projected that it will loosen rates less next year than previously expected.
Generally, once you've locked in a mortgage rate, the terms are fixed and usually cannot be renegotiated. However, some lenders offer a float down option, allowing you to negotiate mortgage rates if market conditions shift favorably during the rate lock-in period.
Mortgage rates can change daily, but only during the five-day workweek. This is similar to the stock market or any other financial market for that matter. They're constantly in flux and as such, pricing can change from day to day, potentially by a lot.
Our analysis of over 6,200 trading days shows that Tuesday has historically produced the highest average daily returns at 0.062%, while Friday and Monday show the lowest average returns at about 0.009% each.
You may change lenders after locking a rate for any reason. However, it usually happens because the initial lender denies the loan, not of the interest rate and fees. If you decide to switch, you must reapply with the new lender.
Most lenders have a rate float down policy, which will allow us to get the rate lowered for you should rates drop after approval. It does not matter whether you have signed the mortgage commitment or not. While some lenders will allow for unlimited rate float downs, others will limit you to just one.
The charge for a rate lock could range from 0.25% to 0.5% of the amount of your mortgage. For example, on a mortgage loan of $450,000, a 0.25% rate lock deposit would be $1,125.
Effective Federal Funds Rate (I:EFFRND)
Effective Federal Funds Rate is at 4.33%, compared to 4.33% the previous market day and 5.33% last year.
At the September 2024 Federal Open Market Committee (FOMC) meeting, the Federal Reserve (Fed) lowered interest rates by 50 basis points, easing monetary policy for the first time in four years due to progress on the Fed's dual mandate. This lowers the interest rate target to a range of 4.75% to 5%.
The next Federal Open Market Committee (FOMC) is on September 17-18, 2024. 1 This is one of the key dates that investors, economists, and policymakers mark on their calendars. The Fed is widely expected to cut its benchmark fed funds rate for the first time in more than four years at the September meeting.
If you're closing on the last day of the month, you're not going to get hit with a big interest bill. But if you close near the beginning of the month, you'll have to pay more in interest.
Experts largely agree that if the numbers work for you now — meaning you can afford the rate and payment you qualify for today — then it's best to lock that rate and start the home search right away.
If a buyer wants to close early, they may need to realize that a Monday closure risks delays from unresolved issues piled up over the weekend. Conversely, Friday closings are risky because you could be left in limbo over the weekend if the funding doesn't come through in time.
Black Friday is the busiest shopping day of the year in the United States and retailers prioritize it and Cyber Monday as highly profitable holiday shopping days.
Listing your property on a Thursday can help sell a home fast as well as for the best price, the Zillow study found. This time frame gives sellers enough time to have multiple showings over the weekend — and, hopefully, an offer or two by Monday.