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When Should I Lock My Interest Rate?

This is a common question homeowners ask us when refinancing or purchasing a home. Nobody ever wants to miss out on future rate declines, but they also don’t want to wait hoping for rates to drop only to find out interest rates have actually increased over where they started. So, how do you know when you should pull the trigger?


The first thing we encourage every borrower to do is take a step back and to try to be objective. This is, after all, your home we are talking about. Odds are, in addition to being the center of your family’s life, your home is most likely your most valuable asset. So, should anyone be gambling with something so precious? Should anyone be trying to outsmart a marketplace they probably know very little about? We say no.


The best advice that we can give any potential borrower is to visit our rate and payment calculator and plug in your loan details to get an instant rate quote. This will give you a starting point to make a decision. Once you have your new rate and payment information, please take a minute to review the scenarios below.




If you are looking to refinance your home and the interest rate and payments offer significant savings over your current situation, click Reserve Interest Rate and Go To Application to lock in your rate right away. Do not play games hoping to save that extra 1/8 of a percent in interest rate. The small payment savings (on a $200,000 loan, the difference in monthly payment for an 1/8 percent lower rate is only $16 per month) is not worth the risk.


Lock in your overall monthly payment savings and don’t jeopardize your family’s home. The risks far outweigh the rewards.




If you are purchasing a new home, you need to be sure you can qualify for the new loan. Once you have viewed your new interest rate and payment, we highly recommend that you click Reserve Interest Rate and Go To Application to lock in your rate. If interest rates were to suddenly increase, you may be faced with a situation where you can no longer qualify for the home you agreed to purchase because you chose not to reserve your rate.


Don’t gamble on your new home. Lock in your rate to ensure the payments and interest rate are what you have budgeted for.


What if I want to let my rate float?


If you are a market expert and you feel very confident that interest rates will decrease in the next few days, you can still click Reserve Interest Rate and Go To Application to reserve your interest rate. Your rate reservation will be valid for 48 hours. If you ask us to leave your rate floating, we will do so, but you will be subject to market rates. However, if you ask us to leave your rate floating, but you later change your mind and decide to lock it in within the first 48 hours, we will honor the rate reservation and allow you to lock in at the rate that was reserved.


Magnolia Bank wants you to be 100% confident in your decision to proceed with your new home loan. This is why we believe in locking in a rate and payment that makes sense as soon as you can. Your family’s home is just too valuable not to lock in a good deal when you see it.


Speak With A Loan Originator 


Would you prefer to speak with a Loan Originator over the telephone?  Please call us directly at   1-800-276-CYOL(2965) and choose option 1.  Or, click here to have one of our experienced representatives contact you directly.