Worried About Future Rate Increases? Our Rate Locks Could Be the Answer

Panama City residents considering purchasing a home in neighborhoods near St. Andrews Bay or the historic downtown might be feeling the pinch of rising mortgage rates, but new options are available to help navigate the volatile market. With the Federal Reserve continuing to increase its funds rate, mortgage rates have followed suit, reaching levels not seen in years.

The Wall Street Journal recently reported that the steady climb in mortgage rates shows no sign of slowing down. This comes after the Fed raised its funds rate by another half point, following an earlier quarter-point increase. While the Fed rate doesn't directly dictate mortgage rates, the two tend to move in tandem. For instance, the average rate for a 30-year fixed-rate home loan climbed to 5.27% shortly after the most recent Fed increase, marking the highest level since 2009.

With more Fed rate increases anticipated in the coming months, some potential homebuyers are contemplating delaying their plans during the traditionally busy spring and summer housing markets along the Gulf Coast. However, local options exist to mitigate the impact of these rising rates.

Mortgage rate locks allow individuals to secure a specific interest rate for a set period, protecting them from future increases while they search for a home or finalize a transaction. Homeowners Financial Group, for example, offers several rate lock options:

• Lock & Shop: This option allows a free rate lock for those actively shopping for a home. It requires the borrower to be under contract for a property by the 60th day of the lock. The lock can be adjusted or extended once under contract (additional fees may apply). This option is available for 30-year fixed-rate conventional and government loans on owner-occupied properties.
• Long-Term Locks: For those who have already found a home and received a loan estimate, Homeowners Financial Group offers rate locks for up to nine months in advance of the closing date. Lock periods of 180, 210, and 270 days are available for Conventional (Conforming and High Balance), FHA & VA (Conforming and High Balance), and USDA loans (with additional restrictions). Each long-term lock includes a Free Float Down feature, protecting the borrower if rates drop within 30 days of closing. An upfront fee, applicable to closing costs, is required for these locks: 0.500% for a 180-day lock, 0.750% for a 210-day lock, and 1.000% for a 270-day lock. This fee is refundable if the loan is declined but not if it's withdrawn.

While individual borrowers cannot control market fluctuations, these rate lock options can help minimize the financial impact of rising rates, potentially saving thousands in mortgage interest over the life of a loan. Residents interested in exploring these options are encouraged to contact a Homeowners Licensed Mortgage Professional.