While your loan application is processed, a lender may promise to hold a certain interest rate and certain number of points for you for a certain period of time. This promise is called a lock, lock rate, or rate commitment. Different lenders may offer the option of locking in interest rates and points agreed upon when you file your application, during the processing of your loan, when the loan is approved, or later.

If interest rates subsequently increase once the loan closes, you will still receive the locked rate. This is the major benefit and protection offered by rate locks. However, if rates move down, the lender's guarantee will hold. You will still be forced to pay the higher rate. If you are comfortable taking a gamble on future interest rates, rate locks can be a good idea. In the end, it comes down to personal preference.

Some lenders may negotiate rates if they drop considerably below the lock-in rate. However, they are not required to do so, and there is no guarantee that your lender will agree to re-negotiate terms.

If you are trying to determine when you should lock, you must first assess current interest rate trends and their likely direction before the close of escrow. Many buyers commit to a rate as soon as they get into contract to purchase. By doing this, the remainder of the transaction is much smoother, but the decision is ultimately up to the buyer.

I usually recommend a rate lock. The reason being that if rates go down that lower rate may come with a point that must be paid by you. Many clients do not want to pay that point for the lower interest rate. Therefore they are better off with the locked rate. Of course if you do not lock a rate and interest rates go up you will be stuck with a higher rate. Additionally that higher rate may disqualify from the refinance you were counting on. If you are not disqualified then you may have to re qualify for the higher rate. That means more time wasted.

Of course in the end it is ultimately up to you and your decision.

Please call me with all of your mortgage needs.