What is a Mortgage Rate Lock?
What is a mortgage rate lock?
On a daily basis, the mortgage interest rates are constantly fluctuating. Sometimes, these interest rates may fluctuate to the point where closing on a loan could result in additional moneys owed due to a higher interest rate.
A good option would be to consider entering into a mortgage rate lock prior to closing on the loan. A mortgage rate lock is an agreement between the borrower and lender to “lock in” the interest rate for your loan for a specific period of time.
Some interest rates are locked in for 30, 45 or, sometimes even, 60 days prior to the scheduled closing. Once you “lock in” your interest rate, you must close your loan within that time period for the lender to honor the rate. At times, due to extenuating circumstances, a lender may be able to extend the timeframe for which the mortgage lock rate applies; however, this is very seldom.