Locking the mortgage terms

Locked-in interest rate with locked-in points

  • You lock both the interest rates and points.
  • Considered a true lock because your mortgage terms should not increase before closing even if market conditions change.

Locked-in interest rate with floating points

  • Your interest rate is locked but points may rise and fall (float) with changes in market conditions.
  • Even if you float your points, your lender may allow you to lock in the points at some time before settlement.

Pro Con
If you float your points and market rates decrease by the time of settlement, you'll benefit by paying less in up-front costs. If you float your points and market rates increase by the time of settlement, you may end up paying more in up-front costs.

Floating interest rate with floating points

  • Under this option, the lender lets you lock in the interest rate and the points at some time after application, but before settlement.

Pro Con
If you wait to lock and rates decrease, you may get more favorable terms. If rates go up, you'll be charged the higher rate.

How can you speed up the approval of the loan?
Be sure to respond promptly to your lender's requests for information while your loan is being processed. You may also want to call the lender and real estate agent occasionally to check on the status of your application, keeping notes on your contacts with the lender so that you have a record of your conversations. While the lender has the greatest role in how fast your loan application is processed, there are certain things you can do to speed up its approval, such as providing the following documents in a timely manner:

  • The purchase contract for the house (if you don't have the contract, check with your real estate agent or the seller).
  • Your bank account numbers, the address of your bank branch and your latest bank statement, plus pay stubs, W-2 forms, or other proof of employment and salary.
  • If you are self-employed, balance sheets, tax returns for two to three previous years and other information about your business.
  • Information about debts, including loan and credit card account numbers and the names and addresses of your creditors.
  • Evidence of your mortgage or rental payments, such as cancelled checks.
  • Certificate of eligibility from the Veterans Administration if you want a VA-guaranteed loan. Your lender may be able to help you obtain this.

This information is adapted from "A Consumer's Guide to Mortgage Lock-Ins" published by the Federal Reserve Board and the Office of Thrift Supervision.

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