What is meant by the term “locking my interest rate”? And then, when and how do I lock my interest rate?
Locking your interest rate refers to guaranteeing a specific interest rate for a specific period of time. That period of time is called the lock period. The lock period guarantees your rate as long as your loan closes and funds prior to the expiration date of your lock. If your closing is delayed beyond your lock expiration date, you could be exposed to higher market rates, so its always good advice to lock for a period longer than you need or longer than your actual closing date. Usually seven to fourteen days past the estimated closing date is advisable for existing home purchases, and thirty or more days for new construction. Typical lock periods are 15, 30, 45, 60 and 75 days. All things being equal, shorter lock periods provide you with a better interest rate. Remember though, I said all things being equal, and things are rarely equal. The market can be volatile, and rates move with market activity, up and down. So lets look quickly at the four possibilities for rates. Rates can g
