Locking In A Favorable Rate

In today’s volatile market, mortgage loan interest rates can go up and down quickly. Consumers who are in the process of applying for a mortgage loan are understandably anxious to be sure that the attractive rate they were quoted. The way to do this is by “locking in” your rate. Your lender may offer to lock in your rate either upon filing of the application, while the loan is being processed, or after the loan is approved.

Do not take your lender’s word that the rate for your mortgage loan is locked in; rather, insist on a written guarantee that this is so. If you are unsure of the validity of a lender’s written guarantee, show it to an attorney or a real estate agent. Having documentation protects you in case the lender later tries to renege on the promised rate or claims that they never promised anything at all. Keep in mind that some lenders will charge a fee to lock in your rate, and this fee may not be refunded if the loan does not close. Be familiar with your lender’s policy in this regard.

Consider carefully before deciding to lock in your rate. While this is the right choice for many situations, such as when interest rates appear to be on the rise day by day, you need to know how your lender will respond if their interest rates go down during the lock-in period. Will they lower your rate? If not, you might want to reconsider.

Whether or not locking in a rate is for you, the best way to decide is by understanding exactly what you can expect from a particular lender. Ask plenty of questions before making a decision.