When you're selling your old Mississauga real estate and buying a new home in Chicago, the real estate agents and mortgage brokers involved in the process will be batting around a lot of unfamiliar terms. When you're buying your mortgage, one of the things that your lender will ask you is whether you want to lock in your mortgage. What is locking in your mortgage, and under what circumstances should you consider it? This article will help you get an idea.

When you lock in your mortgage, you're really locking in the interest rate. That means whatever the going rate on the day you go in to apply for your Toronto mortgage is, your payments will always be calculated according to this rate for the duration of the mortgage or at least until it comes time to renegotiate terms in three to five years. If you lock in your rate, you have what is known as a "fixed rate" mortgage. In this case, your mortgage document will list an interest figure as a definite percentage (i.e. 6.5%).

The alternative to a fixed rate mortgage is a variable rate mortgage. In a variable rate mortgage you don't lock in the rate. Rather, every time your payments are calculated the current going rate will be used. This means if the value of mortgages for condominiums in downtown Toronto goes up, you will be paying more in interest. Similarly, if the rate goes down, you will be paying less in interest. In the case of a variable rate mortgage, your mortgage document will list your rate as prime plus whatever you and the bank have agreed upon (i.e. prime + 1.5%).

So the trick to deciding whether to go with a fixed or variable rate mortgage is in predicting what the prime interest rate will be doing in the next five years or so. If you're familiar with real estate in Arlington, TX and with banks and the factors that influence mortgage rates, you can read financial publications and make an educated guess. However if you lack knowledge, it is always better to take the advice of a financial professional like your banker before you decide.

For some people the decision is a momentous one, and it becomes so difficult to decide that some Richmond, VA houses end up back on the market because the buyers waffled too long. If you're one of these indecisive sorts, you can also get a mortgage that is part fixed and part variable so you can take advantage of both situations. Not all banks offer these split mortgages so talk to your mortgage broker or banker to see whether they are offered in your area.