How to Lock in a Mortgage Rate

If you're looking to buy a house, you're probably shopping for the best mortgage rates on the market. When you finally find a rate that appeals to you, consider locking in the rate. When you lock in a mortgage rate, you establish an agreement with a lender, stating that the lender will hold the current rate until you're finished with the loan process. Here is how to lock in a mortgage rate.

Difficulty: Moderate

Instructions

1. Determine if there is a rate lock fee. Get the specifics about the fee. Ask if the fee is higher for better rates. Some fees are also higher for longer rate lock periods.

2. Ask if the terms of the rate lock include the points you'll pay. Some rate locks include the points, while others float your points. This means that the points you'll pay may change from when you lock in to when you complete the process.

3. Identify when the rate lock expires. Some rate locks last a few days, while others last several months.

4. Inquire about the process for locking in a new rate if the current rate expires before you complete the loan process. Specifically, determine if you'll be required to pay a new fee for the second rate lock.

5. Obtain a written document delineating the terms of the rate lock. Check the document for specific information, such as the amount of your loan, the rate, the points charged and the lock fee.

Tips & Warnings

• Loan agreement terms frequently confuse people. If you don't understand the terms of the rate lock, then ask questions or contact Consumer Credit Counseling Service at [phone].
• Lock a mortgage rate only if you think interest rates may increase.
• Check to see how long it typically takes to process a loan in your area. This helps you determine if you will complete the process before the rate lock expires.
• Do not sign any agreement to lock a mortgage rate without reading it thoroughly.