If you have been searchingfor a mortgage, you will be familiar with the concept of a lock in period for the rate and points on the mortgage. For instance, if you obtain a 30 day lock in for 6 % and 2 points, the lender has to honor that rate and number of points, even if the interest rates go higher within that 30 day period.

If you don\’t close on your loan within the thirty days, of course, you will lose that guarantee. This may not be an issue if rates stay flat or even decrease.

The usual term for a lock in period is 30 days, but it is not that easy to find, negotiate and contract on a home in that period. A lot of buyers will choose to add 15 days, but banks usually charge extra for taking on the added risk of rates going up.

Is a lock in period a good idea in your circumstance? Do you believe interest rates will rise? Or do you feel that interest rates are going to go down further because of the economy?

Another concept many borrowers have is that they don\’t want to have to make this decision, they just want to know the numbers they have to work with in purchasing their home.

The lock in rate creates a time pressure since most buyers want to have a preapproval before they search for a home. This means you have to negotiate your mortgage and have a locked in rate in advance when you start shopping for a home. This is a tight time frame, attempting to find the home, negotiate the price and close in such a limited period.

If you have a good notion of the location and kind of house you want, it can be done quickly. The good news is that most sellers are not in a good negotiating position in the present housing market, so that stage of the purchase should go quickly and smoothly. It is wise to hire a home inspector in advance so you don\’t have to waste time on finding one.

One type of borrower who should definitely take the lock in period is the one who just barely qualifies for a home loan. If his situation changes, he may face a higher different rate.

The point to remember is that a lock in rate is best if you think rates will rise, if you don\’t want to take a chance on them, or if you risk greatly increased rates due to a poor credit rating.

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