With interest rates unpredictably volatile, the good faith estimate you receive when looking for a mortgage may not be the actual interest rate you end up with at the time of closing. Interest rates can change every day, so to combat this, borrowers have the option of locking in the interest rate and points for a set amount of time to ensure their stability.
There are many ways to lock in a loan, depending on your lender, but the most important thing, no matter how it is done, is to get it in writing. A verbal agreement will not cut it, and if the lender refuses a written contract, change lenders. The commitment should specify the number of points as well as the locked interest rate and the period of time before it expires, usually 30 days.
This privilege usually requires you to pay a slight interest rate premium. The lender will also require some show of commitment on your part in the form of an application fee, appraisal, or credit report.
Dont try to guess where interest rates are going when deciding whether or not to lock a loan. If you wouldnt be able to qualify or afford the loan with a slight increased amount, locking the interest rate is a good...
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