While selecting a mortgage lender the first thing that the majority of people look at is the monthly interest. From a fiscal perspective, this approach makes a lot of sense since a lower rate means lower monthly obligations. However most people fail to consider the fact that loan rates hardly ever stay constant. Usually rates change every week and in certain cases every day. Basically the rate that is presented to you is often not the one that you get once your application is approved by the financial institution. This is where mortgage locks come in. A mortgage lock will help you get a mortgage on a particular rate even if the approval process takes several weeks. On this page you'll learn what loan locks are, how are they beneficial for potential borrowers and how to find the ideal one.

Many home-owners have a hard time understanding what a mortgage lock is. The concept is quite straightforward. A mortgage lock is nothing more than a binding deal between a lender and a borrower that guarantees the borrower a specific interest rate on a mortgage loan. Simply put a lock enables you to freeze an interest rate for a specific amount of time. Mortgage locks are crucial because interest rates keep changing with the passage of time and securing a mortgage loan usually takes several weeks and in some cases months.

Locking a home loan rate is a great way to lower your monthly obligations by securing a lower rate of interest. However before doing so you've to think about the costs associated with the process. Nearly all loan providers charge a substantial fee for this service. The exact amount depends on a number of aspects like the length of time for which you want to lock the rate, the nature of the loan, and lastly your credit ratings. The first factor is the most essential one. The longer the time period, higher is the fees.

Do you wish to be protected against regular interest rate fluctuations? If yes then you should take advantage of a mortgage lock. Doing so does have some costs but in the long run you will save lots of money. But there are some things that you should take into consideration. Firstly, you should know that if you don't pay the loan inside the lock period, then the guarantee ceases to exist. Second of all, some loan companies charge an increased interest rate when the borrower is using a lock. It is important that you carefully think about all the benefits and drawbacks to make sure that locking interest rate is financially beneficial for you.