What is a rate lock and what does it cover?

A rate lock literally locks in your interest rate before you finalize the purchase of your home. The lock, which most mortgage lenders offer as an option, protects you should rates rise before you close on your home. Points are also included in a rate lock.

Rate locks are typically good for 15-90 days, depending on the type of home you.re purchasing. Rate lock terms are shorter for existing homes, and usually longer for newly built homes or homes that are still under construction.

If you get a rate lock, we recommend that you get it in writing. The contract should include the interest rate, points, the date at which the lock becomes effective, and the time and date the lock will expire. Yours and the lender's names should also appear on the agreement, as should the address for the home you wish to purchase.

The only real catch with a rate lock is that if interest rates go down, you're stuck. You can't negotiate a lower rate.

There's typically a fee associated with getting a rate lock. Some people avoid getting a rate lock to avoid paying the fee. However, we recommend that you pay the up front expense of locking in your mortgage rate. The fee is minimal compared to what you could pay long-term should interest rates increase.