Locking a Mortgage

Author: Terri Ewing | Date: November 3, 2008 | Filed In: Glossary

Locking a Mortgage Defined

Locking a mortgage is when the lender goes to the secondary market and reserves the money for your mortgage at a certain rate, for a certain time period, and at a certain loan amount. The normal lock period is 30 days but you can lock for less or more. The longer your lock period, the more expensive it is.

Locking a mortgage starts with you and your loan officer or broker. When you decide to lock, the loan officer or broker locks you with their wholesale lender. If they are a loan officer for Countrywide for example, they lock with the wholesale division of Countrywide. A broker locks with whatever wholesale lender they are using for your mortgage. The wholesale lender then goes and secures the money for your mortgage with the secondary market.

Once the mortgage is locked at the secondary market, a lock confirmation is produced by the wholesale lender and then distributed to the loan officer or broker. Your mortgage has to fund by the last day of the lock period. If you are refinancing, the mortgage doesn’t fund until the right of rescission is up. Make sure your lock goes through the rescission period. If your lock expires, lenders go to worst case scenario. If rates are better, you will close at the original lock. If rates get worse, you will close at the new worse pricing. For more on locking a mortgage, read How to Read Mortgage Rate Sheets and Rate Lock: Get It In Writing.

Author: Terri Ewing