"I'm planning to buy in a few months, but can we lock in a mortgage rate now?" We hear that question often from clients who want to be pre-approved, but haven't yet started seriously shopping for a home. While rate holds do exist in mortgage financing, they may not always suit your needs.
My Purchase is a Few Months Away
When it comes to mortgages, "a long time" is anything more than 120 days – or about 4 months – in the future. Within 120 days, we can secure a rate hold for a file if that's what you want as the client. However, it may not always be in your best interest.
In our experience, it can be far better to hold the file on our end and wait for a quick close rate to come up. Quick closes are generally lower rates offered if the mortgage is closing within a short time period, such as 30 to 45 days. There are usually also fewer restrictions with a quick close mortgage rate than if you are holding a heavily discounted advertised rate.
Another consideration when securing a low mortgage rate too far in advance of your home purchase or refinance is that the lender offering the best rate today may also be the lender that offers the best quick close rates. However, a usual requirement for a quick close file is that it must be new business for the lender – which means if you already have a rate hold with them, we can't get the lower quick close rate.
If all of this sounds like a lot to keep track of, you're right. It's our job as mortgage professionals to stay on top of your file, know what products lenders are offering, and secure the best solution for you.
Does a Rate Hold Mean I've Been Pre-approved?
Typically not. More often than not, a rate hold is simply that: a rate hold and not a pre-approval. Our Auxilium team carries out a hard pre-approval when you come to us for a mortgage. By doing this, our brokers are sure that your file fits with at least one lender, and as long as nothing too significant changes in your circumstances, you will be approved when you're ready. Also during this process, we would inform you of a potential range of rates & options based on the information you've provided. (Note that the property you choose could have a negative impact on your deal.) Of course, if it makes sense at the end of this process to secure a rate hold - after we've done a hard pre-approval - then that's what we'll do.
Is it a good idea to plan your home buying strategy in advance? Absolutely. Going through a pre-approval process that gives you a true picture of what you will be able to afford as well as rate options will make the mortgage experience much easier. While your mortgage rate is an important piece of the puzzle, in our experience, it's not the entire puzzle.
If you're ready to find your mortgage solution, contact us today to set up an appointment with one of our planners: call Toll-Free 1-855-590-6520 or visit us at 307 Goldstream Avenue during regular business hours, Monday through Friday 8:30 a.m. – 5:00 p.m. We can also arrange an appointment evenings or weekends to work with you.
Auxilium Mortgage Corporation is based in Victoria, BC and works with clients locally and across Canada. The Auxilium team has over 100 years of combined financial experience and access to dozens of lenders to help you meet your goals.