mean that the loan officer commits that the lender will give the borrower a certain interest rate on the loan. The world of loans and mortgages is fast-paced, and interest rates can change at any time. A rate lock is important because it guarantees that a mortgage lender will give you a certain interest rate, at a certain price, for a specific time. Exactly when the lender locks in the rate is going to vary. Some lenders lock it in at this point, some wait until a later time in the process. This is usually the client's choice, unless the lock period does not exist for that particular lender. A rate lock protects the borrower from rising interest rates in the period between sales agreement execution and closing (often a month). If you lock in a rate of 3.25%, you will only have to pay 3.25% interest even if rates rise while you go through the loan application process. A rate lock is commonly good for 30, 45, or 60 days, though that time period can be shorter or longer. After that period expires, you are no longer guaranteed the locked-in rate unless the lender agrees to extend it. Therefore, arranging a prompt closing is crucial. I have had many clients submit applications but choose to float the rate in hopes that the rate will decrease. I always advise that I cannot predict what the rate will be when they decide to lock it. Oftentimes, when they decide to lock the rate, they are shocked to find that the original interest rate the lender offered had increased significantly. This can effect the buyer's ability to afford the loan, and sometimes, the higher rate can price them out of approval status. My advice is to never chase rates if the opportunity exists to lock the rate.
These loan processing steps are complex, with many variations
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