Rate Locks

Interest rates can change day to day and sometimes during the day. When your loan officer quotes you an interest rate the rate is good for that moment in time only. The markets could change and in a few hours that rate could go up or down.

Because it takes an average 30 days to process a loan application before you can close on a home, its important that you lock your interest rate to keep it from moving with market conditions. If you were promised a 6% interest rate when you applied but did not lock in that rate, when its time to close the loan 30 days later that rate may be 7%. This could add hundreds of dollars to you payment and even disqualify you from the loan.

When your loan officer finds a low interest rate for you, make sure you ask him to lock in the rate. He is required by law to provide you a document indicating your loan is locked and what the rate is.

If the interest rate goes down, usually your still locked into the original rate. On rare occasions the loan officer can talk to the lender and ask to adjust your rate down. The lender may or may not approve. Sometimes if they do approve a large fee is imposed. Loan officer are also reluctant to ask because it damages the relationship they have with lenders if each applicant asks for adjustments to the rate. This causes a lot of additional administrative work and lenders will spend their time chasing rates and adjusting loan files all day.

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