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Monday, April 5, 2010

What is a Locked Loan?

In the mortgage world a lock is a commitment to deliver a mortgage to the investor in a certain time frame at a certain rate. Purchases and refinances closing in the next 30-60 days when locked afford the customer protection against rising rates. Monday rates spiked upward quickly -they almost always rise faster than they fall- after reports that new home sales increased more than 8% in February. Buyers and consumers refinancing are protected against rising rates as long as they can close in the allotted time. Some lenders may play the float game. We don't recommend it. In this climate it is better to be locked on a rate than hope there will be a down tick where you can capitalize. Always work with an experienced professional. By the time you see it in the paper or hear it on the news it's too late. The smart money has locked.