No Crystal Ball for When to Lock Your Rate

By Richard Pisnoy

A rate lock occurs when a borrower agrees with the terms of the loan and requests that their mortgage professional locks the rate.

The actual lock is a written agreement between the lender and the borrower. It specifically details the number of days and rate that at which a loan is locked in. It also lists the amount of points, if any, that the borrower is paying for that rate.

Keep in mind that rates can vary from borrower to borrower and from product to product.  There are many things that can affect the rate.

Some of the items that can affect rate are:

​ Credit score

​ Down payment

​ Loan amount

​ Property type

​ Loan product

​ Length of rate lock

​ Paying points

Generally, rate lock time frames in today’s lending environment range from 15 to 90 days.

In most occasions, the longer the lock, the higher the rate. You, as the borrower, should always — and I do mean always — request a copy of the lock-in confirmation.

The lender should provide this document quickly and it should list all the appropriate information regarding your rate. The last thing that the loan officer and borrower want to happen is a miss communication regarding the interest rate. The lock in confirmation will make sure there is no mistake.

The rate lock dictates payment and obviously you want the lowest one. But no one has a crystal ball.  When locking in, it’s important to make a decision that you feel comfortable in.

Sometimes borrowers can try to guess the market and miss the boat. If rates go up because a borrower wants a slightly better rate and waits, the opportunity to get that original rate may not come back.

You need to weigh the risk against the reward and make a decision that works for you.