With interest rates on the rise, it's a great idea for home buyers to visit their bank or mortgage broker and apply for a pre-approval rate. Also, you may need to think about advancing your plans if you already have a locked-in rate that's about to expire.
A Pre Approved Mortgage locks in your interest rate at the lowest rate available on the day of your pre-approval. This rate lock holds for anywhere from 60 to 120 days while you look for your new home to purchase. If mortgage interest rates go up in that time period you are protected and will still be offered the original low rate
from the date your mortgage was pre-approved. If mortgage interest rates go down you will automatically receive the new lower rate.
It is not unheard of for mortgage rates to fluctuate half a percent to a full percentage point throughout a 120 day time period. Very recently, mortgage rates have been rising - in fact they've gone up nearly 3/4%. If you were calculating what you can afford based on a lower old rate, you may be very disappointed to learn that you can no longer afford that same mortgage amount with the new higher mortgage rates because you didn't take the time to pre-approve your mortgage.