Educational Consumer Tips

Mortgage Rate Lock-Ins

Author: Better Business Bureau


A lock-in, or rate-lock, is a lender's promise that you will receive a specified interest rate, points, or other cost-related mortgage feature if your loan closes within a certain period of time (referred to as the lock-in period).

Lock-in periods average 30 to 45 days but may be shorter or longer. Sometimes a lock-in fee is involved in order to obtain a lock-in agreement.

Although Virginia law does not require that a written lock-in agreement be issued, the Bureau of Financial Institutions, by regulation, defines a lock-in agreement as a written agreement between a mortgage lender and an applicant for a mortgage loan. Therefore, any lock-in agreement should be made in writing. The agreement establishes and sets an interest rate and the points to be charged in connection with a mortgage loan that is closed within the time period specified. Only a lender can lock in a rate.

It is important to verify with the lender the average time it is currently taking to process and close a mortgage loan. Any lock-in period should be long enough for settlement. In a time of high demand for mortgage loans, processing times increase and a longer lock-in period would be appropriate.

In summary:
- Always obtain a written lock-in agreement.

- Carefully read the lock-in agreement prior to signing it.

- Be sure the lock-in period is adequate for current market conditions as a very active market increases the processing time.

- Submit all information requested as quickly as possible.