One of the most important financial considerations of buying a new home is the interest rate paid on the mortgage. Over time, a higher interest rate can add thousands of dollars to the true cost of buying the home. 

When interest rates are low or steady buyers have greater confidence that they will get a favorable rate when they go to secure the loan, but in our current environment of rising interest rates, many lenders are suggesting a rate lock at the time you apply for your mortgage.

A rate lock freezes the interest rate on a mortgage for a period of time before the close of the loan. Typically lasting for 60 days, the lender guarantees the rate will not change during this period of time. So, a mortgage lock protects the borrower from rising interest rates while the loan is processed and approved.

In a period of rising interest rates, as we see today, locking the rate may be a smart idea. Even a small increase in the interest rate can have a huge financial impact.

In the current economic environment, would you lock in your mortgage rate at the time of loan application or would you float your mortgage rate hoping that mortgage rates will come down? Please share your comments with us below. Thank you.