When buying a home your Mortgage Rate is a very important matter.  The long and short of it is that the Mortgage Rate is the interest that you will pay on your loan.  The lower your rate the less you have to pay back.  So locking in your rate becomes even more critical in a market that is fluctuating up to a full point over the first half of 2008.

Locking in your rate before you are ready to close puts you on a time table.  However, it lets you know upfront the points and terms that you will be buying under.  Some rates can be locked for 15 days and some for up to three months.  You still need to buy before that rates terms expire, otherwise you will be back to square one negotiating a rate.

It is very important to get the rate in writing.  While in some cases you can accept a verbal agreement, but never assume that it will stand in court.  So, assume the worst and get the bank to send the terms in writing.   The contract has to lock the interest rate, the points, terms and other costs.  It must include the names the mortgage will be in, the cost of the lock, the terms as well as the effective date and its expiration date and time.  If you have any post-lock options make sure they are included in the contract.

A few things you need to do before locking things in:
• Shop around. Your rates and terms may vary wildly from lender to lender and rate locks can be a serious cost.  Don’t be afraid to shop around before you lock that rate.
• Allow enough time. Make sure you allow for loan processing time in your lock period and be sure to be ready to put in that loan application before the terms will expire.  This includes checking credit reports and even a pre-approval can help.

Keep in mind that even a half of a percent fluctuation can cost you thousands of dollars.  If you lock in your rate you can be better prepared for what the bottom line of your mortgage will be.  With an uncertain market, this can only help.