When should I lock in an interest rate on a mortgage?

[Ewalker33]

I have been preappoved for a mortgage loan and they have approved me at 4.25%. The home I am purchasing is being built and the closing is June 5th. My credit score is predicted to go up at the end of the month, because I just paid down my credit cards to zero balance. I want to get the best rate possible and if my score goes up, I should get a better rate correct?

[Anonymous]

Is your lending offering a 60 day lock free? Either way, I would wait until your balances get reported and your scores update. There's shouldn't be a rush to lock right now unless you're closing in the next 2 wks IMO. Friday's jobs report and Greece's persistent issues signal better rates in the future anyway. That, combined with your scores' liklihood to increase, points to just sitting a bit longer until the score increase.

[ojefferyo]

What is your score now and what do you think it will be after the update? If it's already above 760 then it shouldn't matter, usually fall into the same bracket

[Ewalker33]

My score was 626 when I was pre-approved at 4.25%. My Fico Score now is 644 and it should be close to 660 the next update.

[Anonymous]

What type of loan are you doing?

[Ewalker33]

FHA Loan.

[Anonymous]

If you're going FHA, credit score doesn't have much of an impact on rate (other than needing to meet your lender's minimum requirement). I would call and ask your loan officer where you fall within their specific requirements and if they have different FHA rates for certain credit brackets.

[Ewalker33]

My Lender mentioned something about I may have the possibillity to get a 3.75% interest rate by closing (June 5th) if my score continues to go up. That's a really good rate and hope its true, but was curious if this is even possible?

[Anonymous]

its possible if you have a large downpayment and pay some points and get your score to 680

[Lemmus]

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@Ewalker33 wrote:

I have been preappoved for a mortgage loan and they have approved me at 4.25%. The home I am purchasing is being built and the closing is June 5th. My credit score is predicted to go up at the end of the month, because I just paid down my credit cards to zero balance. I want to get the best rate possible and if my score goes up, I should get a better rate correct?

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..ouch!!! ...that will almost certainly result in lowering your scores unless your utilization was more than 30% ...yes, it crazy ...but you want to keep one card with a balance of 3-9% on it for optimal revolving accounts section scoring ...see the Rebuilding Credit forum here for more on the logic behind it.

...most lenders block rate their loan rates ...whether you will see a rate decrease depends on what score range you were in to begin with and whether or not any score increase moved you into the next range block ...I just had a 15 point jump in mid score and the LO said they wouldn't pull again because I was already in their best rate block ...ymmv ...hth