Is it commonly possible to buy an “Option for a Mortgage at a specific Interest Rate”?
"I think the answer to this is just ""no.""  It's not commonly available to have the option to obtain a mortgage at a fixed amount and fixed rate, especially over a timeframe like the 5 yrs you mentioned in your question.  There would be several practical problems with such a thing, including but not limited to: As was noted in a comment to your question, it is common to be able to ""lock"" a rate over a period of days to weeks.  This isn't the same as what you asked though, because it's much shorter term and it's typically tied to having an offer accepted on a specific house."
First consider the basic case of what you are asking: you expect to have a future obligation to pay interest, and you are concerned that the rate when you pay it, will be higher than the rate today. In the simplest case, you could theoretically hedge that risk by buying an asset which pays the market interest rate. As the interest rate rises, increasing your costs, your return on this asset would also increase. This would minimize your exposure to interest rate fluctuations. There are of course two problems with this simplified solution:  (1) The reason you expect to pay interest, is because you need/want to take on debt to purchase your house. To fully offset this risk by putting all your money in an asset which bears the market interest rate, would effectively be the same as just buying your house in cash. (2) The timing of the future outflow is a bit unique: you will be locking in a rate, in 5 years, which will determine the payments for the 5 years after that. So unless you own this interest-paying asset for that whole future duration, you won't immediately benefit. You also won't need / want to buy that asset today, because the rates from today to 2022 are largely irrelevant to you - you want something that directly goes against the prevailing mortgage interest rate in 2022 precisely. So in your specific case, you could in theory consider the following solution: You could short a coupon bond, likely one with a 10 year maturity date from today. As interest rates rise, the value of the coupon bond [for it's remaining life of 5 years], which has an implied interest rate set today, will drop. Because you will have shorted an asset dropping in value, you will have a gain. You could then close your short position when you buy your house in 5 years. In theory, your gain at that moment in time, would equal the present value of the rate differential between today's low mortgage rates and tomorrow's high interest rates. There are different ways mechanically to achieve what I mention above (such as buying forward derivative contracts based on interest rates, etc.), but all methods will have a few important caveats: (1) These will not be perfect hedges against your mortgage rates, unless the product directly relates to mortgage rates. General interest rates will only be a proxy for mortgage rates. (2) There is additional risk in taking this type of position. Taking a short position / trading on a margin requires you to make ongoing payments to the broker in the event that your position loses money. Theoretically those losses would be offset by inherent gains in the future, if mortgage rates stay low / go lower, but that offset isn't in your plan for 5 years. (3) 5 years may be too long of a timeline for you to accurately time the maturity of your 'hedge' position. If you end up moving in 7 years, then changes in rates between 2022-2024 might mean you lose on both your 'hedge' position and your mortgage rates. (4) Taking on a position like this will tie up your capital - either because you are directly buying an asset you believe will offset growing interest rates, or because you are taking on a margin account for a short position (preventing you from using a margin account for other investments, to the extent you 'max out' your margin limit). I doubt any of these solutions will be desirable to an individual looking to mitigate interest rate risk, because of the additional risks it creates, but it may help you see this idea in another light. This probably isn't worthy of being more than a comment, is not specific to your needs (other answers cover that better), and I am a big advocate of NOT owning property but investing the money in the markets instead (potentially higher rates of return), however, if I were going to buy a property I would do so sooner rather than later as a rise in interest rates is not a matter of if but when. Borrow now when it is cheaper to do so and lock in the rate by taking out a fixed rate mortgage - the rate might be higher than variable rate mortgages but their rates will go up above your fixed rate very quickly. Buying a house may save you money compared with renting, depending on the area and specifics of the transaction (including the purchase price, interest rates, comparable rent, etc.). In addition, buying a house may provide you with intangibles that fit your lifestyle goals (permanence in a community, ability to renovate, pride of ownership, etc.). These factors have been discussed in other answers here and in other questions. However there is one other way I think potential home buyers should consider the financial impact of home ownership: Buying a house provides you with a natural 'hedge' against possible future changes in your cost of living. Assume the following: If these two items are true, then buying a home allows you to guarantee today that your monthly living expenses will be mostly* fixed, as long as you live in that community. In 2 years, if there is an explosion of new residents in your community and housing costs skyrocket - doesn't affect you, your mortgage payment [or if you paid cash, the lack of mortgage payment] is fixed. In 3 years, if there are 20 new apartment buildings built beside you and housing costs plummet - doesn't affect you, your mortgage payment is fixed. If you know that you want to live in a particular place 20 years from now, then buying a house in that area today may be a way of ensuring that you can afford to live there in the future. *Remember that while your mortgage payment will be fixed, other costs of home ownership will be variable. See below. You may or may not save money compared with rent over the period you live in your house, but by putting your money into a house, you have protected yourself against catastrophic rent increases. What is the cost of hedging yourself against this risk? (A) The known costs of ownership [closing costs on purchase, mortgage interest, property tax, condo fees, home insurance, etc.]; (B) The unknown costs of ownership [annual and periodic maintenance, closing costs on a future sale, etc.]; (C) The potential earnings lost on your down payment / mortgage principal payments [whether it is low-risk interest or higher risk equity]; (D) You may have reduced savings for a long period of time which would limit your ability to cover emergencies (such as medical costs, unexpected unemployment, etc.) (E) You may have a reduced ability to look for a better job based on being locked into a particular location (though I have assumed above that you want to live in a particular community for an extended period of time, that desire may change); and (F) You can't reap the benefits of a rental market that decreases in real dollars, if that happens in your market over time. In short, purchasing a home should be a lifestyle-motivated decision. It financially reduces some the fluctuation in your long-term living costs, with the trade-off of committed principal dollars and additional ownership risks including limited mobility. If it's possible in your case to get such a loan, then sure, providing the loan fees aren't in excess of the interest rate difference.  Auto loans don't have the fees mortgages do, but check the specific loan you're looking at - it may have some fees, and they'd need to be lower than the interest rate savings. Car loans can be tricky to refinance, because of the value of a used car being less than that of a new car.  How much better your credit is likely determines how hard this would be to get.  Also, how much down payment you put down.  Cars devalue 20% or so instantly (a used car with 5 miles on it tends to be worth around 80% of a new car's cost), so if you put less than 20% down, you may be underwater - meaning the principal left on the loan exceeds the value of the car (and so you wouldn't be getting a fully secured loan at that point). However, if your loan amount isn't too high relative to the value of the car, it should be possible.  Check out various lenders in advance; also check out non-lender sites for advice.  Edmunds.com has some of this laid out, for example (though they're an industry-based site so they're not truly unbiased). I'd also recommend using this to help you pay off the loan faster.  If you do refinance to a lower rate, consider taking the savings and sending it to the lender - i.e., keeping your payment the same, just lowering the interest charge.  That way you pay it off faster. "If you have a big pocket there are quite a few.. not sure if they take us clients though. Vcap, Barclays, Icap, Fixi, Fc Stone, Ikon.. Then there are probably a few banks that have x options also but i don't know if a private investor can trade them. A few im not sure if they have fx options or if they are ""good"": GFTFOREX, Gain capital, XTB, hmslux, Ifx Markets, Alpari, us.etrade.com Betonmarkets might be something if you are interested in ""exotic options"" maybe?" "I love the idea of #1, keep that going. I don't think #2 is very realistic.  Given the short time frame putting money at risk for a higher yield may not work in your favor.  If it was me, I'd stick to a ""high interest"" savings account (around 1%). I don't mind #3 either, however, I'd be socking whatever you could to mortgage principle so you can get out of PMI sooner rather than later.  That would be my top priority.  Given the status of interest rates, you may end up saving money in the long run.  I doubt it, but you may. If you choose to go with #3, don't settle for a house that you really don't like.  Get something that you want.  Who knows it may take you a year or so to find something!" "Alrighty.  So your question is, how confident are people that FB stock will close above a certain price at a certain time.  A ""call"" option contract allows you to buy shares in the future at a certain price.  FB calls are available for March of 2013.  The number in the ""strike"" column is the price you can buy FB stock at on the given date. Let's take the ""33.00"" strike.  This allows you to buy FB shares at $33 each next March.  If at that time it turns out they're worth $50 each, you can buy them at $33, then immediately sell them on the open market for $50, making money.  The person selling you the option knows that there's a chance the price will be above $33 in March, so he's going to charge you a few bucks to cover that possibility.  In this case, he's charging you $5.30 (as of me writing this).  So, you can have the option to buy FB shares at $33 each for $5.30.  This means the guy selling you the option is reasonably confident that in March, FB stock will be at or under $38.50, otherwise he'd lose money when you exercised the option.    Therefore, $38.50 is the option market's best guess as to the highest FB stock will be going for in March." I found this article to clarify some of the issues. One point raised is that the concession can be thought of as getting tax exemption for the closing costs, which normally are not allow. I'm not sure I follow this logic, since you can only deduct the interest, not the principal. I asked a lender, and he verified you can only spend the concession money on closing costs. I think if your closing costs are less than 1% of the loan, its probably not worth it to go for a concession over the price reduction. With interest rates so low, its also not cost effective to buy down points on the loan. This should limit most of your closing costs.