The Mortgage Process: What Does it Mean When Your Rate is "Locked"?

The process of getting a mortgage has largely remained the same for the last 5-10 years (at least) and has become comfortably familiar to people who have been through the process before.

The very basic process looks somewhat like this:

1. You pick a loan officer and start working with them by filling out an application and providing all supporting documentation such as income documentation, bank statements, identification, etc.
2. Your loan officer starts the paperwork process that is largely invisible to you but includes things like running your file through the computer systems for automated approvals, working with the title company, insurance company and underwriters to make sure your loan is handled as efficiently as possible.
3. You will generally have an appraisal done on your home which will usually involve some coordination on your part.
4. You will generally have at least one request/communication with your loan officer through the process asking you for “more information relating to (fill in the blank here)”.
5. And at some point, your loan will be “done” and ready for you to sign final documents generally at a title company.

So if this is the high-level process of getting a loan, it is important to also be aware of one question that is very important to know the answer to in today’s world:

How do you know when your rate is “locked” in this process?

When you sign your initial paperwork, there is usually a disclosure form that you will sign that is called a “Lock/Float” disclosure.  This disclosure says that your rate will “float” until your loan officer “locks” it and also describe the lenders “float down” policy, if they have one.  It will also inform you that after your loan officer locks your loan, they will notify you via email/phone/fax/however you want.

So until you have received confirmation from your loan officer that your rate is locked, you need to know that it is floating unless your loan officer has locked it and did not informed you.

Should you lock your rate today or wait until tomorrow?

It depends.

You can listen to the advice of your loan officer, you can research what other loan officers are saying to do — but in the end?

There are very few, (if any) people who can tell you for certain what rates are going to do on any given day.

Especially in today’s market.