How to Lock In a Mortgage Interest Rate
Refinancing a mortgage or purchasing a home involves a great deal of paperwork and usually an extended period of time. To reduce stress, some lenders and loan institutions offer rate locks, which guarantee the availability of the quoted rate at the time you close the loan. Locking in a rate is not difficult, though you need to find a lender that offers this service, as not all do.
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Instructions
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Ask all prospective lenders about their policies on rate locks before you submit any mortgage applications. Only apply to those who offer a rate-locking service, even if there is a fee.
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Get rate quotes from all prospective lenders. Fill out applications at 2 to 3 lenders who offer low rates with rate-locking services.
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Research market trends. Look at the trends of the prime rate, the federal cost of funds, and the LIBOR. The prime rate and the LIBOR (London InterBank Offered Rate) are nationwide rates used to calculate adjustable interest rates. These can be found daily in the Wall Street Journal or in the site listed in Resources. The federal cost of funds is the price at which banks borrow from the Federal Reserve. Look at least six months in the past. If you lock a rate in, your rate cannot go up (for the specified period, often 30 days), but it can also not go down, either.
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Choose the rate you'd like to lock-in. You may need to pay a service fee to keep the rate locked. The service fee is different from mortgage "points"; this is a much lower fee (normally no more than $100) that simply "locks" the rate for you. Get the agreement in writing -- lenders should be able to provide this to you. This will be evidence of the lock in case problems arise later in the loan process.
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Keep a copy of the rate lock-in for your records. Proceed with the loan process as scheduled, and confirm the rate is the same when you come to the closing table.
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