Should I Lock My Rate?
Locking your interest rate is when you and the lender agree upon which interest rate, program and fee you will choose on a specific date and for a specific period of time (usually 15, 30 or 45 days). You must close your loan within the time frame selected.
Locking your interest rate is free, but not always wise. If you ask your lender (like your local bank) to lock in your interest rate and interest rates fall you will usually be stuck with that interest rate. Lenders do not renegotiate interest rates once you lock in. They don’t even renegotiate with mortgage lender. Their attitude is that if you locked your interest rate with them and interest rates go up they wouldn’t ask you to take a higher interest rate, and you wouldn’t right? You would want them to stick to the agreed upon interest rate. Some lenders say they will let you renegotiate your rate once if rates fall, but they will not give you the prevailing interest rate. Instead, they will meet you somewhere in the middle between the interest rate they locked and the prevailing interest rate on the day you want to renegotiate.
With a good mortgage lender you can simply re-lock your interest rate with another lender. The broker owns your loan until the lender funds the transaction. Since the broker owns the loan and all of the documentation in the file he can simply take the package and give it to another lender to get you a better interest rate. If you went with your local bank they would own your package and would not let you give it to another lender or bank. You would have to start all over again with the new bank. New loan application, new credit report, new appraisal, new copies of your financial documents and a new escrow.