Understanding Loan Locks

Loan locks are probably your best weapons against a highly volatile market. In other words, although locking your loan for a specific term incurs fees from the lender, you’re at least given the peace of mind that you will only be paying for the interest rate you signed up for.

Investors actually advise borrowers to lock their loans all the time. The interest rates tend to fluctuate everyday. As a borrower, you need to lock the loan to protect yourself from unexpected expenses.

Once you lock your loan though, you will not be able to enjoy the benefits of rate drops in the future. This is alright, because it’s better to pay a fixed monthly amount. You will be able to control your budget better this way.

In terms of losing points with your loan, rest assured that you will only lose about half a point anyway whenever you decide to lock your loan.

If the locked loan doesn’t work out for you, you can risk it and look for a better loan elsewhere. There’s a high probability that you’re lender will even negotiate lower interest rates for you when you do this. Banks generally don’t like losing their clients.