When should I lock in rates? Is 60or90 day better or does it not make a difference. Also, how do I shop around for rates with lenders, do I just call?

Asked by tpns28, Roseville, CA Wed Jan 9, 2013

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, ,
Thu Jan 10, 2013
What Michele says below is absolutely right. When you lock really depends on the type of transaction you are doing and when it is scheduled to close (If someone tells you "you only want to lock at 14 days", run away). However, if I can add something that specifically answers your question, I would like to...

A 90 day lock would be pretty uncommon and somewhat expensive. Is there a reason you would need to lock for 90 days? Such as a seller approved short sale that isn't approved by the bank maybe? Or are you doing a refinance with one of the big four banks (they are taking 60-90 days to get them closed right now)? Either way a 90 day lock is not usually advisable. Unless it becomes obvious that interest rates are going to go up significantly in the next 30 days the cost of a 90 day lock makes no sense. 60 day locks are also not all that common, the extra cost is not usually worth it.

I would say the average lock is 30-45 days, most of them being 30 day locks. Because volume is high at a lot of companies right now some lenders are offering 45 day locks at the same cost as a 30 day lock. 15 day locks have the least amount of cost, but are plain and simple a gamble if you are looking at the lowest of the lows already and you float your loan in hopes of getting something better. With the market where it is right now the odds of rates getting 0.125% better are MUCH worse than the odds of them getting 0.25 worse (or more).

The answer depends of your closing date, the market (your mortgage professional should have the tools to advise you properly on this), and how much risk you want to take.

Greg Cowart
2 votes
, ,
Thu Jan 10, 2013
A really great loan officer will explain to you that the length of time you lock an interest rate for is going to effect that interest rate. The longer the rate lock, the higher the rate.

With the current market and interest rate, it is not really necessary for you to consider locking until you are ready to get your loan documents to the title company. Rates have been low and the fluctuation in the market up and down has been so slight, that a rate lock would just be wasting your money.

As far as shopping for a loan. Yes, you can call, but WHO are you going to call? Here is where it gets tricky. When you are shopping for rates, you should seek referrals from your friends, coworkers and, if you are a buyer, your real estate agent.

How do you shop for the rate? Bottom line? We all have the same money from which to pull. If yo ask the proper questions, you should be able to make your selection, not so much on the rate, but the rapport that you have with the loan agent.

Let the loan officer know your credit score. Let them know the approximate value of your home. Both the credit score and the equity position of your home will effect your interest rate. You should be given an interest rate quote that includes the APR (annual percentage rate)

The APR will be slightly higher than the quoted interest rate. The APR takes into consideration all the closing costs you will be paying for this interest rate. **** The larger the gap between the APR and the quoted interest rate, the more you are paying for the loan.****

In the end, you will find that you are making your choice not wholly on the interest rate, but on who gave you the most information without making you feel 'sold'.

In regard to credit reports, you have 30 days to have lenders run your credit report without your credit score being effected. After that 30th, any credit run by a lender/mortgage entity will effect your credit score.

Credit reports are good for 90 days. After the 91st day, your credit can be, once again, run by lender without it effecting your credit.

Keep in mind a lender should not be running your credit without your written consent.

If you want to run your quotes by me: cgravelle@diversifiedmg.com. I can give you feedback on whether or not they sound competitive.

Bottom line: just keep asking questions!! :)
2 votes
Lance King, Agent, San Francisco, CA
Thu Jan 10, 2013
The best thing you can do is get lender recommendations from your agent. He/she should have relationships with quality lenders who can give you the best info based on your type of transaction.

Best Regards,

Lance King/Owner-Managing Broker
DRE# 01384425
1 vote
Michele Pete…, Agent, Rocklin, CA
Wed Jan 9, 2013
Congratulations....getting pre-approved is half the challenge of house shopping.
You have done the hard part.....Let the fun begin!

Your lender will lock the rate for you.
It all depends on the contract, when you have been been accepted by the seller,
type of sale - short sale, REO, equity sale, probate.

They are always looking for the best rate for their clients,but let them know you want a good deal
and have seen X% advertised. There can be hidden fees, points, etc with those extremely low rates.

Happy to help if you have additional questions.

Good luck!
1 vote
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