What’s A Mortgage Lock-In?
Mortgage rates go up and down daily if not more often — they “float” with the market.
Many borrowers are concerned that during the period between when they apply for a mortgage and when they close on a house that mortgage rates will rise and that the house will be less affordable (or maybe not affordable).
So, to assure that get the rate available at the time of application, many borrowers “lock-in” rate.
Some lenders provide lock-ins without cost, others have a charge. The longer the lock-in, the greater the risk to the lender, and so the more likely a fee.
The best lock-ins place a ceiling on both rates and points. A lock-in that only caps rates and says nothing about points exposes a borrower to very high fees should rates go up.
Some lenders have lock-in programs that allow borrowers to “float down” their rate lock. This means that if rates fall prior to closing, the borrower can re-lock at the lower rate.
Speak with lenders for specific programs and options.
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