Vegas loan officer Fred Grohgan answers question on rate locks

Dear Expert: I'm thinking about taking the leap and buying a home. I hear the term "rate lock" a lot. Exactly what is it and would now be a good time to use it? — All Locked Up Dear Locked:

A "rate lock" or "lock" is when you set the interest rate on the property you are buying. You cannot lock a loan or a rate until you actually have a property. Rates or locks vary, depending on loan program and type, credit scores, down payments and lock period. Interest rates change daily, and in some cases, hourly. Timing is everything. The longer you lock a loan in for, the higher the rate. Try to lock with 30 days or less. You can also buy down the rate by paying discount points, a discount point being 1 percent of the loan amount. How much of a "discount" you can get in the rate, depends on market conditions. Like anything else, knowledge, timing and working with a professional mortgage banker is key to everything.

Borrowers are often told there is no charge for a rate lock. That is true in the sense that the rate lock isn't associated with a fee. Rather, a longer rate lock typically involves a higher interest rate, which is more expensive for the borrower. The interest rate or "pricing" difference between a 15-day rate lock and 60-day rate lock might be as little as one-eighth or as much as half of a percentage point.

Good luck,

Fred Grohgan

Senior loan officer

W.J. Bradley Mortgage Co.

702.924.2893