A rate hold is a guarantee from a lender that locks in a specific mortgage interest rate for a set period of time, usually 30 to 120 days. This ensures that even if market rates rise before you finalize your mortgage, you still receive the agreed-upon rate.
How It Works
When you apply for a mortgage or get pre-approved, the lender may offer a rate hold. During this period, you can shop for a home knowing your rate is secured. If rates rise, you are protected. If rates fall, many lenders will allow you to take the lower rate instead.
Typical Duration
Rate holds typically last between 30 and 120 days, depending on the lender. The most common period is 90 days, giving buyers time to find a home and complete the mortgage process.
Benefits
- Protection: Guards against rising interest rates during your home search.
- Flexibility: If rates drop, you can often still take advantage of the lower rate.
- Peace of mind: Provides certainty about your future mortgage payments while you shop for a home.
Final Thoughts
A rate hold is a simple but powerful tool for homebuyers, offering security in a changing market. It ensures that you won’t be caught off guard by sudden rate increases while giving you time to make a confident purchasing decision.