What is a locked-in rate?
A locked-in rate, also referred to as a rate lock, is a specific interest rate for a mortgage loan that is being held for a borrower. The locked rate stays the same for a period of time, generally between 30 and 60 days, while the mortgage progresses to closing.
Interest rates change frequently, often several times a day. Homebuyers who are shopping for a mortgage can lock in a specific interest rate once they apply for a loan. This ensures the homebuyer will have access to that same rate while the process of obtaining a mortgage progresses. If a lower rate becomes available as an application is being processed, it is generally possible to lock in the lower rate.
However, lenders can unlock your rate if the type of loan you’re applying for changes, credit scores change, an appraisal on a home is lower or higher than expected, or the lender cannot verify your income.
Are you shopping for a mortgage and looking to lock in today’s low interest rates? Check out today’s mortgage rates.
A homebuyer requests a loan estimate from a mortgage lender. The lender’s current rate is 4.5 percent. The homebuyer believes that to be the lowest rate available. He requests the loan estimate, agrees to the basic terms, and asks for the interest rate to be locked while he finds a home. The locked rate is good for 60 days. The homebuyer completes the loan process within that time and maintains the 4.5 percent interest rate, even though the current rates on the open market are higher. This helps the homebuyer to save money.
At Bankrate, it’s possible to find the most up-to-date mortgage interest rates available using this easy mortgage rate analysis tool.