Once I have done some assessments on the mortgage calculators and received a rate quote from the local bank, why do I need to lock my loan in?

Loan locks are generally an option, not a requirement unless the loan transaction is ready to be completed.  Loan locks are a form of rate guarantee by the mortgage lender.  If the loan is not locked the interest rate on that loan can change with market interest rates anytime up until the loan closing.  In order for the loan to close and the documents to be prepared the interest rate on the loan must be determined, the loan lock sets the rate so it will not change before closing.  If it is early in the mortgage application process, the loan lock is generally an option to consider if the interest being offered by the bank is competitive and it appears as though rate may go higher.  In some cases it can be very important to check interest rates in the mortgage payment calculator to make sure the borrower would still qualify if the interest rises before they lock the rate in.

This entry was posted on Thursday, December 11th, 2008 at 6:48 am and is filed under Mortgage FAQs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.