possible,” Lisa Smith explains. “While this might seem to be a good strategy, it isn’t necessarily the best course of action in all situations.”
Step #7. Discuss with Your Lender
Talk to your chosen lender (bank or otherwise) and ask specific questions before you lock down a rate. First, make sure you know and understand your lender’s rules regarding mortgage rate locks. Different lenders will have different rules, and this could be one of the determining factors when you’re doing your home loan shopping. Be absolutely clear about the lender’s mortgage rate lock rules. If you’re unsure, ask. For example, ask if your locked rate can or will change in certain situations. Second, keep in mind that locking in a low interest rate can come with a cost. Some lenders charge a mortgage rate lock deposit upfront, and others offer a rate lock in exchange for a slightly higher interest rate than the current prevailing rate, or require the borrower to pay a certain number of points, either fixed or floating. “Fixed points refer to a set number of points; with floating points, the interest rate is locked in, but the number of points that must be paid to guarantee the rate can change over time,” explains Lisa Smith. Next, you must ensure your mortgage rate lock will last long enough to cover the entire home-buying process from start to finish. Some closing processes can last a month or longer. If you suspect this will be your situation, talk to your lender about locking down a rate for the full length of that drawn-out process without paying any penalty fees. Keep in mind that if the home doesn’t close before the end of the agreed-upon mortgage rate lock
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