What Does Locking-in Mean?
Because we are in the “mortgage business” and engage in “mortgage talk” all day long, we often forget that new buyers may not understand what we are talking about. The other day someone asked, “What does locking-in mean?” We’re glad they asked, because we regularly advise locking-in as a strategy for home buyers and for those who are considering refinancing to take advantage of lower rates. (Lock-ins are also known as rate locks).
We advise buyers to lock-in at several critical points.
- When they have been pre-approved for a mortgage
- When they anticipate a rate increase
After applying for a mortgage, a lender will make you an offer. You can lock-in that rate to protect yourself against rate increases. This gives you time to find and purchase your home, or decide whether to refinance your mortgage.
What if the rates actually go down? You get the lower rate! So locking-in gives you the best of both worlds. It protects you against rate increases and gives you the lowest rate possible.
How long can you lock in for? Lock-ins can be normally be held for 90 and some lenders allow 120 days.
