Question: Should I Lock My Mortgage Rate

Answer: The decision to lock your rate can depend on several factors.

It is important to understand what actually takes place when your broker or lender locks a rate. A broker typically has the ability to lock a loan with a lender prior to having a loan approved. Once a rate has been locked the lender will provide a lock confirmation that includes the details of the loan. Lenders typically allow you to lock rates for 15 days, 30 days, 60 days, 90 days, and even longer. Longer lock periods may require an upfront lock fee to secure the rate. Lenders charge for this service since they must go out and hedge the market to secure that funds will be available when the loan closes. Your broker or loan officer is your best source for deciding the best time to lock a loan. Typically, it is best to lock the loan if you are satisfied with the terms and payments. Small rate reductions will only have moderate payment benefits. Choosing to float your rate and finding out that your rate has increased can add stress to the transaction. Make sure your broker explains to you the time frame for completing the transaction. If you lock your rate for 15 days then the process needs to go quickly to complete everything prior to the lock expiring. If you anticipate delays gathering your documents or arranging for someone to allow an appraiser access to the property you may be better served to lock the rate for 30 days. If your rate lock expires prior completing the loan process, you will be required to pay additional fees to secure the rate. Some lenders will allow short term extensions at no cost. It is extremely important that your broker communicate with you to ensure the process is complete prior to any rate lock expiring.

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