Lock In Your Loan
A lock-in is a lender’s promise to hold an interest rate and points for a specified period of time. Depending on the lender, you will lock in the interest rate and number of points you agree to pay either at time of application, during processing of the loan, at time of loan approval, or later.
A lock-in at application may be useful when interest rates are on the rise. By locking in your interest rate and points, you protect against rate increases. On the other hand, if interest rates are falling, it might be best to wait until after application approval to lock in.
Some lenders have pre-printed forms that state the agreement in exact terms. Others lock-in by telephone at the time of application.
Lock-ins aren’t always free. Some lenders charge up-front fees, which may or may not be refunded upon application withdrawal or denial, or if the loan fails to close for some other reason. Other lenders charge the fee at settlement. The fee may be a flat fee, a percentage of the mortgage amount, or a fraction of a percentage point added to the lock-in rate.
Lock-ins of 30-60 days are common. However, some lenders only offer short-term lock-ins, good for seven days after loan approval.