When you're looking for a mortgage, you're likely to shop among lenders for the most
favorable interest rate, and the lowest points and other up-front charges. When you find the
most favorable terms and the lender that you want, you'll apply to that lender.
Lock-ins are an way to ensure that at settlement, what you requested from your lender
is what you'll get.
What is a Lock-In?
A lock-in, also called a rate-lock or rate commitment, is a lender's promise to hold a
certain interest rate and a certain number of points for you, usually for a specified period
of time, while your loan application is processed.
Depending upon the lender, you may be able to lock in your interest rate and points when:
- You file your application;
- during processing of the loan;
- when the loan is approved; or
- later.
Pro
Lock-Ins protect you against increases while your application is processed.
Con
A locked-in rate may prevent you from taking advantage of price decreases during this
period.
This information is adapted from "A Consumer's Guide to Mortgage Lock-Ins" published by
the Federal Reserve Board and the Office of Thrift Supervision.