When mortgage rates are moving higher, one of the biggest decisions a buyer has to make is:

Do I lock my interest rate today or wait and hope rates come back down?

There is another question that is just as important:

Is the rate I was quoted actually priced correctly for my loan?

A mortgage quote can look great at first. But if the lender used the wrong down payment, property type, credit score or loan structure, that quote can change once the real numbers are entered.

When Rates Keep Moving Higher, Waiting Has a Risk

Mortgage rates can change every day — sometimes more than once in the same day.

When the bond market has been moving against mortgage rates for several days or weeks, waiting for the market to suddenly turn around can become expensive.

Let’s say you are comfortable with the payment at today’s rate.

You decide not to lock because you are hoping the rate improves.

Instead, rates move another 0.25% or 0.50% higher.

Now your payment has increased without the price of the house changing at all.

That is why I look at a rate lock as risk management, not as trying to perfectly predict the market.

If the rate and payment work for you today, sometimes protecting that number is more important than trying to catch the absolute bottom.

But Make Sure You’re Locking the Right Rate

Before locking, I want to make sure the quote is based on the actual loan.

A mortgage rate is not just based on what you see advertised online.

Pricing can change based on things such as:

• Credit score
• Down payment
• Loan-to-value ratio
• Condo versus single-family home
• Primary residence versus investment property
• Purchase versus refinance
• Loan amount
• Fixed versus adjustable rate
• Points or lender credits

This is where two lenders can appear to be quoting the same loan when they really aren’t.

20% Down Versus 25% Down Can Change the Pricing

This is a great example.

A buyer may originally ask:

“What is the rate with 20% down?”

But before making the final decision, we should also run the numbers with 25% down.

Why?

Because mortgage pricing is divided into loan-to-value ranges.

Twenty percent down normally means an 80% LTV.

Twenty-five percent down normally means a 75% LTV.

Those two loans can fall into different pricing buckets.

For a conventional loan, that difference can affect the cost of obtaining the same interest rate — and sometimes putting another 5% down can produce noticeably better pricing.

The important part is not simply saying:

“More money down gives you a better rate.”

We need to calculate whether putting that extra cash into the property actually makes financial sense.

Condos Are an Even Better Example

Condos can have additional pricing adjustments that a single-family home may not have.

Under Fannie Mae’s current conventional pricing matrix, certain attached condo loans have an additional pricing adjustment. The adjustment also changes depending on the loan-to-value ratio.

For example, moving from just above 75% LTV to 75% LTV or below can make a meaningful difference in condo pricing.

That means a buyer putting 20% down on a condo could receive different pricing than the same buyer putting 25% down.

This doesn’t automatically mean the mortgage rate will move by a certain percentage.

These adjustments affect the price of the mortgage. A lender may reflect that difference through the interest rate, discount points, lender credits or a combination of them.

That is why the complete Loan Estimate matters more than simply asking:

“What’s your rate?”

What About Debt-to-Income Ratio?

Your debt-to-income ratio — or DTI — is still extremely important because it helps determine whether you qualify for the mortgage.

But be careful with outdated information.

Fannie Mae’s proposed DTI-based loan-level pricing adjustment was rescinded and never became part of the current LLPA structure.

That doesn’t mean DTI doesn’t matter.

A higher DTI could affect:

• Loan approval
• The loan program available
• Automated underwriting
• Lender-specific requirements
• How much you can borrow

But it should not simply be confused with a current Fannie Mae DTI pricing adjustment.

Before You Lock, Ask These Questions

Before locking a mortgage rate, make sure the lender has the correct:

Property type. Is it a condo, townhouse or single-family home?

Down payment. Are we pricing 20%, 25% or another amount?

Credit score. What score is actually being used for pricing?

Occupancy. Primary residence, second home or investment property?

Loan amount and program. Conventional, FHA, VA, jumbo or another program?

Lock period. Is the quote based on a 15-, 30-, 45- or 60-day lock?

And most importantly:

Does this rate include points, or are you receiving a lender credit?

Two lenders can both quote 6.5%, but one could be charging thousands of dollars more to get it.

My Approach

When rates are moving higher, I don’t like gambling with a payment that already works.

First, make sure the loan is priced correctly.

Then compare the options.

For example:

20% down vs. 25% down

Rate with zero points vs. rate with points

Today’s locked payment vs. the risk of waiting

Once you know those numbers, you can make a much better decision.

The goal isn’t to brag about getting the lowest rate of the week.

The goal is to structure the mortgage correctly and protect a payment that makes sense for you.

That’s the money side of real estate.