A rate lock is a commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate and lender costs for a specified period of time.
The lock-in period
The lock-in period is the guarantee of an interest rate for a specified period of time by a lender, including loan term and points, if any, to be paid at closing. Short term locks (under 21 days) are usually available after lender loan approval only. However, many lenders may permit a borrower to lock a loan for 30 days or more prior to submission of the loan application.
When to lock your rate
In the volatile home-lending market, mortgage brokers can serve as safeguards, offering their clients security, safety, and peace of mind. A professional mortgage broker can wade through the mountains of rate data and program options, researching current market conditions to find the most accurate and up-to-date information about cost-effective loan options.
Your mortgage broker informs you, in writing, of lock-in options.
There’s a basic rule to remember: the longer you ask the lender to charge you a specific rate, the more expensive the loan.
See also: Mortgage glossary, Why use a broker?