Mortgage Rate Lock: Process, Timing, Costs

In part one of this two-part blog series, we went over some of the basics on the mortgage rate lock, a vital tool many borrowers take advantage of. Allowing you to lock in your rate at a current point when it’s favorable, a mortgage rate lock helps buyers who need some security within their borrowing situation.

At Primary Residential Mortgage, we’re here to help with numerous mortgage loan and mortgage rate needs, including explaining and obtaining mortgage rate locks for clients who may be in need of them. While part one of our series went over the basic information on how they work, today’s part two will hit on how a rate lock is actually done, plus the proper timing for it and what the related costs are here.

How It’s Done

Here’s the basic process you should take for obtaining a mortgage rate lock:

• Inquire about general time frames and when you’re eligible for a rate lock (more on this in a bit).
• Ask about fees or costs, both for locking the rate and for any potential extensions of the lock that might be needed. Also ask about whether funds are refundable if you cancel the application.
• Monitor mortgage rates on the market and consult with your real estate agent and loan officer for their thoughts on the direction it might go in.
• Usually, you’ll lock in your rate at a point where rates are rising – if they’re still dropping, it’s better to wait until they’ve hit the floor before locking.
• Once you’ve locked in, review your new loan estimate, which should include specifics about your rate lock.

Timing Considerations

Generally speaking, rate locks will be acquired for mortgage borrowers in between the process of getting pre-approved and submitting your actual mortgage application. During this time, you should keep an eye on the mortgage rates on the market while keeping in touch with your lender and real estate agent. In some cases, you may want to lock in your rate as soon as it’s offered if it’s on the rise; if rates are dropping, you may not ever use one at all.

Rate Lock Costs

The cost of a rate lock will depend completely on the lender you’re working with. Some charge separate fees for a rate lock, either expressed in a dollar amount or an actual percentage of the total loan value. Other lenders will not charge a direct fee for a rate lock, but the rate you’re offered may include a built-in fee in this case. Be sure to inquire about this area.

For more on mortgage rate locks, or to learn about any of our mortgage rates or home loan services, speak to the staff at Primary Residential Mortgage in Shoreline today.

*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.