Locking in an Interest Rate

I'm asked this question so often I felt it needed some attention. What is locking in and when can I do it?

Lets start with Rate Lock time period.

Rate locks are based on the amount of time needed once you lock a rate until the amount of days needed for the loan to close and fund. So if your lock is good for 30 days then your loan must close and fund within that 30 day time period. If it does not, the lender can charge you a per day extension or take you to current market which could change your rate for the worse. Lets say you locked a rate and your rate was low and you miss your closing date and rates are now higher. In this case it would make sense to extend the lock and pay a per day charge to do so. Your lender will be able to tell you what that is. Lets say your closing is 45 days and you are worried that interest rates may rise.

You ask "Can I go ahead and lock my rate now and if rates move lower can I take that rate"? Some lenders offer a one time free float down so long as your within 20 days or less of the closing date. Normally some form of commitment is required to participate and is refunded at closing.
What is the difference if you lock 45 days vs. 30 days vs. 10 days? The answer is, the longer your lock, the higher the price for the rate.
Generally and I do mean generally, 15 days on a lock will cost about .25 percent of your loan amount.

If your interest rate was Zero Points at 4.75% on a 30 day lock, then a 45 day lock would have cost you .25% more. On a 100,000 loan that would mean 250.00 for the extra 15 days or .25% of the loan amount. For rate quotes visit me at homeloanapproval.com

Alan