In times of turbulence, being seatbelted can help. Making assumptions that you are seatbelted when you are not is unwise. As a consumer, you place a lot of faith and trust in your loan officer. Especially, when it comes to rates and payments. In recent weeks, interest rates have fluctuated wildly. And the trend has been toward increasing rates. These changes occur in a small space of time and your loan officer may or may not be at the ready to lock your rate in time. But, it is YOUR loan, and YOU are the one who makes the decision on when to lock your rate.
Underwriting times have increased dramatically in the past few months, and that means a rate lock period may not be sufficient to protect your rate all the way to closing. Once you lock a rate, then you are guaranteed that rate as long as you close within the lock period. If closing is delayed beyond the lock date, you will have 'worst case pricing'. That means if rates are lower, you get the original rate. If rates are higher, you get the current rate. The house always wins.
You get better pricing with a shorter rate lock period, but you are gambling that between time of application and time of rate lock, that rates will improve. In times of rate volatility, that may not always be the case. If you are 'FLOATING' the rate during processing, you have no guaranty that the rate will not change by the time you lock the rate. If you lock the rate, you will sign a rate lock disclosure outlining the length of time the rate is guaranteed and the terms of that rate lock. You may or may not be required to pay a deposit on that rate. If you ask the rate to be locked and do not have a signed disclosure by both you an the lender, then your rate is not locked until that occurs.
Some loan officers, though not a large percentage, will use a 'quote and float' strategy that is designed to make them more money. By locking for a shorter time frame, the loan officer hopes that rates will improve, deliver you the promised rate, and have a higher commission check at closing. If rates go the wrong way, the 'quote and float' loan officer will probably be very evasive until things improve on the rate scene. Your signed rate lock disclosure is your protection. A verbal request to lock means nothing without it. And a direct question that demands a 'yes' or 'no' answer, such as "Is my rate locked at x%?" will tell you what you need to know.
Be advised, however, that rates can change at any time, and they can change from the time of your request until the time the rate lock is requested of the lender or lock desk. Even if that time lapse is only a few minutes. The underlying responsibiity to lock the rate is yours. And until you are locked, your loan application processing rate is not guaranteed.
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