If a new home is in your future, you will want to shop carefully for both the house and the mortgage that will finance it. The same goes if you want to refinance your current mortgage.
Two low-cost booklets from the Consumer Information Center may help. Published by the Federal Reserve Board and the Federal Home Loan Bank Board,
”A Consumer`s Guide to Mortgage Lock-Ins” (Item 426V, 50 cents) and ”A Consumer`s Guide to Mortgage Refinancing” (Item 427V, 50 cents) explain the basic facts so you can make wise mortgage decisions.
A mortgage lock-in, also called a rate lock or a rate commitment, is a lender`s promise to hold a stated interest rate and number of points for you while your loan application is processed. Before you lock in a rate, be sure you are familiar with the market.
The refinancing publication suggests that it is not a good idea to refinance unless the prevailing interest rate is at least 2 percent lower than the interest rate on your current mortgage. It usually takes three years to realize the savings you will get from a lower interest rate.
The booklets suggest questions to ask the loan officer and tips for speeding the approval of your application.
For copies, send your name and address and the appropriate item numbers and fees to R. Woods, Consumer Information Center, Pueblo, Colo. 81009.
