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Health & Fitness

Home Buyer Protection Against Rising Interest Rates Before Buying

Many economists and housing experts predict mortgage interest rates to steadily rise throughout 2014.  The Wall Street Journal forecast in their article titled Housing Outlook for 2014: Steadier, Sturdier “mortgages may become easier to get, but they will also be more expensive.”   Likewise, Forbes Magazine ranks rising mortgage rates second in their top ten predictions of the 2014 housing market (Housing Outlook 2014: 10 Predictions From The Experts.)

Many, if not all home buyers who will be obtaining a mortgage to purchase a new home, are in a large part basing their search for a new home on the monthly payments for a particular price range.  As we know, interest rates affect the monthly payment.  Moreover a large portion of home buyers have been pre-approved.    These two considerations are based on interest rates as they are now, not on interest rates as they may be 30, 60 or 90 days later.  During a prolonged search, Home buyers can be left wondering, “what if rates rise, what are my new payment now… am I still pre-approved…  Do I need to find a smaller home?” 

A Lock Then Shop program offered by very few banks and mortgage lenders gives a solution to the worries of rising interest rates and gives comfort to home buyers (and sellers) that higher interest rates have not changed their desired payments or rendered their pre-approval invalid.

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With a Lock Then Shop program, a bank will lock-in or guarantee the mortgage rate prior to a home buyer finding their new home and securing a contract to purchase it.  This is in reverse order of the standard procedure of - shop for a home, receive a contract, lock-in and hope rates have not risen.  Instead a homebuyer would first - lock-in their interest rate, THEN shop for a home (while feeling secure that they are protected), and then obtain a contract to purchase a home.

Lock Then Shop programs offer a guaranteed interest rate for a set time of typically 90-120 days and come with the added ability to float down to a lower rate should mortgage rates go down once a home is found and a contract acquired.   Potential home buyers can shop with confidence that their rate is locked and guaranteed, that their potential monthly payments are protected, that any pre-approval is safeguarded; all while still having the ability and insurance that should rate go down once they find a home, they can still benefit from lower rates.

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Lock Then Shop mortgage programs are offered for all types of mortgages; conventional loans, FHA, VA, and USDA Rural Housing loans and typically for 30 year and 15 year fixed rate loans and are not available for adjustable rate loans (ARMs).

For more information regarding Lock Then Shop programs and their benefits, call 1st Mariner Bank at 877-733-4411.

If you’re searching for a home to purchase in Prince Georges County or anywhere in Maryland, search all homes listed for sale online at www.marylandproperties4sale.com .

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