Real Estate Term of the Day: Locked-In Interest Rate
LOCKED-IN INTEREST RATE – the rate by a lender at the time of loan application. The promise is a legal commitment of the lender, though there may be qualifications or contingencies that allow the lender to charge a higher rate (Barron’s Dictionary of Real Estate Terms)
There is a misconception that you can lock-in an interest rate before going under contract on a home. This is not the case. You can only lock-in your interest rate once you are under contract on a home. Below is a graph showing the historical interest rate of the 30-year mortgage.
Source: Freddie Mac Primary Mortgage Market Survey (PMMS®)