Your Loan Estimate may show a rate that has been “locked” or a rate that is “floating,” which means it can go up or down. Mortgage interest rates change daily, sometimes hourly. A rate lock sets your interest rate for a period of time. Rate locks are typically available for 30, 45, or 60 days, and sometimes longer.

The interest rate on your Loan Estimate is not a guarantee. If your rate is floating and it is later locked, your interest rate will be set at that later time. Also, if there are changes in your application—including your loan amount, credit score, or verified income—your rate and terms will probably change too. In those situations, the lender gives you a revised Loan Estimate. There can be a downside to a rate lock. It may be expensive to extend if your transaction needs more time. And, a rate lock may lock you out of better market pricing if rates fall.

Rate lock policies vary by lender. Choosing to lock or float your rate can make an important difference in your monthly payment. To avoid surprises, ask:

  • “What does it mean if I lock my rate today?”
  • “What rate lock time frame does this Loan Estimate provide?”
  • “Is a shorter or longer rate lock available, and at what cost?”
  • “What if my closing is delayed and the rate lock expires?”
  • “If I lock my rate, are there any conditions under which my rate could still change?”

CosmoLends are experts in home loan products including FHA, VA, Conventional, USDA and OHFA, as well as purchase rehabilitation loans such as the FHA 203(k) and HomeStyle Renovation products. Call us and speak to one of our mortgage coaches to find out how we can help. You can also call us at 216.387.1003 and speak with a member of our loan team for a FREE consultation.

Published from Your home loan toolkit – A step-by-step guide by Consumer Financial Protection Bureau