Locking in your interest rate.

If you believe that interest rates are going to rise before you close on your new mortgage, you may want to request that your loan be locked by your loan officer.

Locking in your interest rate is a very important and key part of your mortgage transaction and the home-buying process. You should always ask your mortgage loan officer for a copy of the confirmation page for your rate lock to verify that the rate has indeed been locked.

Locking in your interest rate is a lender's guarantee that your new mortgage will have a set rate, and fees. The lock on the rate will have a specific period of time. If your loan doesn't close in time, you could possibly face a higher interest rate.

Usually, interest rate quotes will include a lock period of 30 days. If you know your loan will take longer, say 45 or 60 days, you can either pay slightly more for a longer rate lock or choose to not lock the rate until closer to closing.

The longer you need to lock your rate, the higher the interest rate will be. For example a 90 day lock will result in a higher interest rate than a 30 day lock. If interest appear to be falling you may be better off letting the rate "float" than locking, even if you are approaching your closing date.

Do not assume that your mortgage professional has locked the rate for you. Ask for a lock confirmation.
If you do not lock the rate, it will "float", or continue to move with the market. It may go down, but it may go up.

» DISCLAIMER: The information contained in this article on 'Locking in your interest rate.' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.