Locking vs. Floating Your Mortgage Rate

 

To mortgage folk across the country, it’s an age-old question: “Lock or float?” It’s a question loan officers and mortgage brokers get asked on a daily basis, often over and over again by panicked borrowers and first-time home buyers.

And it might just be the most important answer you come up with during the loan process, as it will determine the mortgage rate you ultimately receive.

How Locking vs. Floating a Mortgage Rate Works

• You get the option to lock or float your interest rate when you apply for a mortgage
• If you lock, the interest rate won’t change as long as you fund your loan before its expiration
• If you float, rates may go up or down until you finally lock it in
• Your loan officer or broker may be able to advise you on which move to make

When you submit a home loan application, you will be asked if you want to lock in your mortgage rate or float the rate. If you choose to lock the rate, you are guaranteeing yourself a certain interest rate on your mortgage.

So if the lender says you can lock in an interest rate of 6.25% on your 30-year fixed-rate mortgage today, and you’re happy with that, they can lock it in for you. This ensures your rate will not change, even if mortgage rates spike higher over the days and weeks after you lock.

At the same time, this means you won’t be able to take advantage of a lower mortgage rate, assuming they drop even more as your loan closing date approaches. Note that locks come with an expiration date, such as 15 days, 30 days, and so on. So you must fund before that date.

Conversely, if you choose to float your rate, you’re essentially telling the lender that you don’t like where rates are at, and want to hold out for better.

Lock or Float? Lock your Rate or Float your Rate...

• Floating a mortgage rate is inherently risky because no one knows what tomorrow holds
• It can be a dangerous game to play if you can’t afford a higher interest rate
• But you can potentially wind up with a lower mortgage rate if you do choose to wait
• One tip is the more time you have until closing, the greater your chances of securing a lower rate

When deciding between locking and floating, you need to assess your situation. Every borrower has a unique story, and every day is different, so there is no hard and fast rule here. Some borrowers may not be comfortable with “letting it ride.” While others may be market experts and have a good handle on the direction of mortgage rates. Generally, what’s bad for the economy is good for mortgage rates, which explains why they are so darn high at the moment.

If you prefer to sleep at night and “like” where mortgage rates are right now, locking might suit you better than floating. And if you think mortgage rates aren’t going to get any better, again, locking is probably the move. Additionally, if you can’t risk taking on a higher mortgage rate (think a DTI ratio on the brink), locking your rate would be very smart to avoid any future hang-ups or a denied loan application. Source

DRE ID # 01769353

NMLS ID # 394275

What Do Interest Rates Really Mean?

 

What is interest and an interest rate?

To put it simply, interest is the price you pay to borrow money — whether that's a student loan, a mortgage or a credit card. When you borrow money, you generally must pay back the original amount you borrowed, plus a certain percentage of the loan amount as interest. There are some exceptions: if you pay your credit card balance in full every month, or you have a promotional 0 percent interest rate, for instance, you will not pay interest.

If potential lenders and creditors see a past record of responsible credit behavior and consider you a low-risk borrower, you may receive lower interest rates.

The total amount you pay back in interest can vary, depending on the length of your loan and whether interest rates are fixed or subject to change (known as variable interest rates). A fixed interest rate does not change; a variable interest rate is tied to a benchmark interest rate called an index. When the index changes, the interest rate may change as well.

When interest rates are high, it's more expensive to borrow money; when interest rates are low, it's less expensive to borrow money. Before you agree to a loan or sign up for a new credit card, it's important to make sure you completely understand how the interest rate will affect the total amount you owe.

How is my interest rate determined?

Lenders and creditors have their own criteria to decide what interest rates to offer you. These may include credit scores, credit reports, factors such as your income and the length of the loan. Economic trends, such as the benchmark interest rates mentioned above, also can influence your interest rate, particularly on home mortgages.

Interest rates are generally unavoidable when borrowing money, but it's worth it to comparison shop and understand the real costs of the loans or credit before you accept.

What is considered a high interest rate and what is considered a low interest rate?

What is considered a high or low interest rate depends on the specific type of loan. For example, credit cards often carry high interest rates, commonly in the double digits, making them comparatively expensive forms of debt. Mortgages typically feature lower interest rates, with rates significantly below historical averages often perceived as low. Auto loans and personal loans fall somewhere in between, with rates influenced by factors such as creditworthiness and the length of the loan term.

What is an APR?

An Annual Percentage Rate (APR) is another rate that you may come across when borrowing money. An APR is your interest rate for an entire year, rather than just a monthly fee or rate, on your credit cards or loans, plus any costs or fees associated with the loan. It's the total cost of having the credit card or loan, stated as a percentage. The APR is intended to make it easier to compare lenders and loan options. Credit card companies are required to disclose the APR before issuing the card and also on monthly statements.

It's important to do your research and be aware of how interest rates affect the total cost of the loan and using credit. Source

DRE ID # 01769353

NMLS ID # 394275

Your Home Readiness Checklist

 

Tips from Margeate Work to Help You Enjoy a Cozy, Stress-Free Season;

The seasons changing are the perfect time to make your home shine — both for guests and for your own peace of mind. Whether you’re hosting family, decorating for the season, or just enjoying quiet time at home, here’s a simple checklist to help you get ready:

Home Comfort & Maintenance

• Check your heating system and replace filters before the cold sets in
• Test smoke and carbon monoxide detectors
• Clean out gutters and downspouts to prevent winter clogs
• Seal windows and doors to keep warmth in and energy bills low
• Schedule any small repairs you’ve been putting off

Decor & Ambiance

• Give high-traffic areas a quick refresh — entryway, guest rooms, living room
• Add cozy touches: blankets, warm lighting, and seasonal scents
• Decorate safely — keep cords secure and avoid overloading outlets
• Set out a few “signature” decorations that make your home feel personal and welcoming

Guest & Gathering Prep

• Deep clean kitchen appliances (especially the oven and fridge)
• Stock up on essentials — paper goods, cleaning supplies, and baking staples
• Prepare guest spaces with fresh linens and little comforts
• Make room for extra coats, shoes, and gifts

End-of-Year Homeowner To-Dos

• Review your mortgage and home equity options before year-end
• Save receipts for any home improvements (they can help at tax time!)
• Start a list of goals for your home in 2026 — remodels, upgrades, or a possible move

A little preparation now means more time to enjoy what matters most — good food, good company, and the comfort of home.

NMLS ID 394275 | DRE ID 01769353

Happy Labor Day!

 

“Either you run the day or the day runs you.” — Jim Rohn

Happy Labor Day from us at Work and Associates Home Loans! 

We hope you enjoy your weekend.

Phone: 916-847-3090

1350 Old Bayshore Hwy Ste. 520

Burlingame,  CA  94010

margeate@workhomeloans.com

Why Fall and Winter Might Be the Best Time to Buy a House

 

Buying a house in the fall and winter has long been a smart move for bargain-hunters. These cooler months feature fewer competing buyers, more motivated sellers, and a higher chance you’ll see price reductions.

Cool Weather Advantages

In the fall and winter, it may be tricky to determine the state of a yard or see the roof if there’s a lot of snow, but there are some great benefits of house-hunting during this time:

• Less competition. Many buyers pause their home search when kids are back in school or when the weather turns, which reduces bidding wars and gives you more negotiating room. (This seasonal slowdown is still frequently mentioned by industry analysts for 2025.) National Association of REALTORS®

• More motivated sellers & price reductions. Sellers who list in the off-season are often more motivated to close (potentially due to job changes, relocations, or tax/timing reasons). Realtor.com and other data sources have continued to show a higher share of price cuts in the fall weeks. 

• Better service from professionals. Lenders, inspectors, and agents usually have more bandwidth after the peak summer season. This gives them more time for problem solving and more time for personalized attention.

• Realistic expectations. Homes listed in fall and winter tend to have been on the market longer or surfaced after price adjustments. If you’ve been searching through the summer, keep an eye on the homes that were just outside of your price range. Sellers might drop the price, meaning you could be in line for a bargain in the fall.

Cool Weather Challenges 

Of course, there still are challenges to buying a home in the fall or winter, and it's important to keep these in mind as you search:

• Snow cover means you won’t get a good look at the yard.

• Inspectors can have more difficulty seeing roofs and grading around the outside of the house, and they can’t inspect air conditioning units.

• Repairs to the outside of the home can be challenging in the winter, and paint won’t stick in freezing cold. This might be a time you need to escrow for repairs if your lending program allows it. 

• Because our days are shorter, it can be challenging to see the outside of the home well and gauge levels of natural light inside, too. 

Practical Tips

Use the following tips to make the most of your off-season house-hunting:

• Get pre-approved early. Even in a slower season, sellers want to see financing strength. A current pre-approval keeps your offer credible.

• Watch weekly rate and inventory reports. Mortgage rates shift week-to-week.
• Inspect for season-specific issues. Ask for thorough HVAC and roof inspections and consider a contingency that allows you to negotiate repairs.

• Be realistic about seller timelines. Even motivated sellers may want a specific closing date. If the seller needs time, offering flexible move dates (if you can) can be a negotiation advantage.

• Use price reductions as a signal. If a home has had a recent price cut, research how long it’s been on market and whether other listings nearby have also dropped — that strengthens your negotiating position. 

• Home prices can vary from neighborhood to neighborhood. It's important to work with an agent familiar with your target micro-market; they can tell you whether off-season deals are common there.

Source

NMLS ID 394275 | DRE ID 01769353

3 Ways to Take Advantage of your Home’s Equity

 

Three common ways to take advantage of your equity;

 1.) Refinance with cash out

Refinancing with cash out involves taking out a new mortgage for the current value of your house to pay off your old mortgage and giving you “cash” back for the amount you have in equity. Most lenders require that you maintain a certain amount of equity in your home (usually up to 20% of the value). In rising interest rate environments, this type of loan is not as favorable as other home equity products because higher interest rates + higher mortgage means higher payments. Not to mention, if you obtained a mortgage in the last several years, there’s a good chance you already have a historically low-interest rate.

2.) Home equity loan

A home equity loan is a loan that is taken out against the equity you have in your home. In essence, your home is the collateral for the loan. The loan money is paid in one lump sum, usually has a fixed rate, and a fixed term for payback (usually 5-30 years). With the fixed amount borrowed, fixed rate and fixed term for payback, payments are the same each month throughout the life of the loan. Home equity loans are ideal for homeowners who have one big project or know up front the expenses that will need to be paid.

3.) Home equity line of credit (HELOC)

HELOCs are like home equity loans in the way the amount that could be borrowed is calculated. The main differences are that HELOCs most often have a variable rate, a dedicated draw period (the period of time, usually 5-10 years, where you can withdraw HELOC funds), and a dedicated repayment period (usually 10-15 years). With a HELOC, you withdraw money as you use it and pay interest only on the money borrowed (like a credit card). This type of loan is generally favored for homeowners who have multiple projects or needs that will occur over a span of time.  During the draw period, payments are usually interest-only payments and during the repayment period, payments are made on principal and interest. Because of the variable rate, possible fluctuations in the amount borrowed, and the differences in payments during draw and repayment periods, the monthly amount due varies.

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Closing Costs: What are they and how much are they?

 

Mortgage closing costs include expenses related to applying for the loan and finalizing a real estate sale. Some of the costs are related to the property, while others are related to the mortgage lender’s services and the paperwork involved in the transaction. You’ll typically pay most of these costs on closing day — though, if you have certain types of government-backed loans, you may be able to roll the closing costs into your mortgage.

How much are closing costs?

Mortgage closing costs are typically about 2 to 5 percent of your total loan amount. For a $400,000 loan, for example, closing costs could range from $8,000 to as much as $20,000.

The total amount you’ll pay in closing costs depends on three key factors:

1.) The price of the home

2.) The home’s location

3.) Whether you’re buying or refinancing

According to a 2025 report from Lodestar, a closing cost data provider, the average closing costs for a borrower buying a single-family home in the U.S. are $4,661. The average closing costs for a refinance are $2,403. Keep in mind that these averages don’t typically include real estate commissions.

However, those costs vary widely across the country, partly due to state and local tax laws. For example, in the survey, homebuyers in Washington, D.C. paid the highest average closing costs for a purchase loan, at $17,545. New York and Delaware came in second and third, respectively, with average closing costs of more than $13,000 and more than $12,000. The states with the lowest average closing costs were Missouri ($1,740), Iowa ($1,640) and South Dakota ($1,551).

Who pays closing costs?

While the buyer tends to pay many closing costs, the seller is responsible for paying some, too. Buyers can try to negotiate with the seller to cover some of their costs — called “seller concessions” — though that’s typically only feasible if the seller doesn’t have competing offers.

In addition, there are limits on seller concessions, depending on the buyer’s loan type. If you are purchasing a property with a conventional loan, you may negotiate up to 9 percent of the purchase price or appraised value, whichever is lower. FHA loans and USDA loans allow for up to 6 percent, while VA loans have a maximum of 4 percent total. Jumbo loans vary based on the lender.

Closing costs paid by the buyer

Here are closing costs you can typically expect to pay if you’re buying a home:

• Appraisal fee: This fee covers the cost for a licensed appraiser to determine the home’s value. The average appraisal fee for a single-family home is about $350, according to Angi. While this is considered a closing cost, you typically pay it well before closing day.
• Attorney fee: You may choose to use an attorney during your closing, or your state may require one.
• Credit check fee: Chances are, if you’re in the process of purchasing a home, you’ve checked your credit score and report already. But your lender will want to make its own inquiry, and there’s typically a fee associated with doing so.
• Discount points: By purchasing discount points (also called mortgage points), you can lower your mortgage rate. You’ll usually pay 1 percent of the loan principal for a 0.25 percent rate reduction.
• Origination fee: Lenders can charge an origination fee for creating the loan, which is generally 0.5 percent to 1 percent of the amount you’re borrowing. This fee might include other costs, such as the application fee and the underwriting fee.
• Per-diem interest: The per-diem interest rate on a mortgage is the daily interest that’s charged between the closing date and the start of the billing cycle.
• Prepaid homeowners insurance premiums, mortgage insurance premiums, property taxes and homeowners association (HOA) fees: Your lender may require a year of advance insurance and property tax premiums to be held in escrow. If your property is located in a community with a homeowners association, you may have to prepay some of those fees at closing, too.
• Property survey fee: Your lender may require this to confirm that your property boundaries match the title. The cost depends on the property size, the survey type and your location.
• Real estate agent commissions: The buyer’s agent and the seller’s agent typically split a commission of about 5 percent of the sale price.
• Recording fee: This fee goes to a government agency that records the real estate transaction and makes it a public record. It’s often around $125.
• Title insurance policy: Lenders require borrowers to obtain title insurance in case problems arise with ownership after the sale. This policy protects the lender, and the cost is usually about 0.50 percent of the amount of the mortgage. You may also buy your own title insurance for an additional cost.
• Title search fee: Unless you’re buying a new construction home, your lender will have a title company search property records to ensure there aren’t any issues with the title of the home, such as a tax lien. The fee for a title search is around $200.
• Transfer tax: Many states impose a transfer tax when real estate changes hands. Often, the seller pays this tax, but in some places, the cost is shared with the buyer.

How to Lower your Closing Costs

You can’t get away with not paying any closing costs, but there are ways you can lower the amount. Here are a few ways to reduce closing costs:

• Look for lenders that offer discounts: Consider working with a mortgage lender that doesn’t charge an origination fee or that’ll offer you a discount. If you’re getting your mortgage at your bank, you can also try asking for a discount or fee waiver, since you’re already a customer.
• Apply for down payment assistance: Particularly if you’re a first-time homebuyer, explore down payment assistance and grants that can help cover closing costs.
• Use a no-closing-cost loan: Don’t let the name fool you — you’ll still pay closing costs with a no-closing-cost loan. Instead of paying them upfront, you’ll finance them with your mortgage — and pay interest on them — or pay a slightly higher interest rate.
• Negotiate seller concessions. To encourage a sale, a seller might agree to pay some of your costs.
• Shop around when possible: You’re allowed to shop for certain closing costs, like title insurance, title searches and home appraisals. Getting comparison pricing can help you reduce your closing costs.

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