Lock Periods

The lock period is the period during which the lender guarantees the rate and points associated with the mortgage. If the lock period is 30 days, at 3 points and 5.5%, the lender is required to make the loan at that price any time within the 30 days. After that, the lock period may be extended for a small fee if rates haven’t raised, or if they have, the new lock period will include a new, higher rate. If you have some difficulty qualifying at today’s rates, you will want to lock in a mortgage as soon as possible, to avoid further potential rate and/or point increases. Additionally, you’ll want to select a period long enough to cover the closing date of the loan, as well as a buffer period of 2 weeks. This way, in case there are any unforeseen problems, you will still have the rate and point combination that you locked in. There is also the possibility of taking a risk and waiting to lock in. If rates haven’t risen for 15 days during a 30 day lock period, the number of points you have to pay may drop a little in order to encourage people to obtain the mortgage.