Guidelines for Locking in A Kentucky Mortgage Rate
All About Lock-Ins
In most cases, the terms you are quoted when you shop among lenders only represent the terms available to borrowers settling their loan agreement at the time of the quote. The quoted terms may not be the terms available to you at settlement weeks or even months later. Therefore, you should not rely on the terms quoted to you when shopping for a loan unless a lender is willing to offer a lock-in.
What Is a Lock-In?
A lock-in, also called a rate-lock or rate commitment, is a lender’s promise to hold a certain interest rate and a certain number of points for you, usually for a specified period of time, while your loan application is processed. (Points are additional charges imposed by the lender that are usually prepaid by the consumer at settlement but can sometimes be financed by adding them to the mortgage amount. One point equals one percent of the loan amount.) Depending upon the lender, you may be able to lock in the interest rate and number of points that you will be charged when you file your application, during processing of the loan, when the loan is approved, or later.
A lock-in that is given when you apply for a loan may be useful because it’s likely to take your lender several weeks or longer to prepare, document, and evaluate your loan application. During that time, the cost of mortgages may change. But if your interest rate and points are locked in, you should be protected against increases while your application is processed. This protection could affect whether you can afford the mortgage. However, a locked-in rate could also prevent you from taking advantage of price decreases, unless your lender is willing to lock in a lower rate that becomes available during this period.
It is important to recognize that a lock-in is not the same as a loan commitment, although some loan commitments may contain a lock-in. A loan commitment is the lender’s promise to make you a loan in a specific amount at some future time. Generally, you will receive the lender’s commitment only after your loan application has been approved. This commitment usually will state the loan terms that have been approved (including loan amount), how long the commitment is valid, and the lender’s conditions for making the loan such as receipt of a satisfactory title insurance policy protecting the lender.
Will Your Lock-In Be in Writing?
Some lenders have preprinted forms that set out the exact terms of the lock-in agreement. Others may only make an oral lock-in promise on the telephone or at the time of application. Oral agreements can be very difficult to prove in the event of a dispute.
Some lenders' lock-in forms may contain crucial information that is difficult to understand or that is in fine print. For example, some lock-in agreements may become void through some unrelated action such as a change in the maximum rate for Veterans Administration guaranteed loans. Thus, it is wise to obtain a blank copy of a lender’s lock-in form to read carefully before you apply for a loan. If possible, show the lock-in form to a lawyer or real estate professional.
It is wise to obtain written, rather than verbal, lock-in agreements to make sure that you fully understand how your lender’s lock-ins and loan commitments work and to have a tangible record of your arrangements with the lender. This record may be useful in the event of a dispute.
Will You Be Charged for a Lock-In?
Lenders may charge you a fee for locking in the rate of interest and number of points for your mortgage. Some lenders may charge you a fee up-front and may not refund it if you withdraw your application, if your credit is denied, or if you do not close the loan. Others might charge the fee at settlement. The fee might be a flat fee, a percentage of the mortgage amount, or a fraction of a percentage point added to the rate you lock in. The amount of the fee and how it is charged will vary among lenders and may depend on the length of the lock-in period.
What Options Are Available for Setting the Mortgage Terms?
Lenders may offer different options in establishing the interest rate and points that you will be charged, such as:
Locked-In Interest Rate--Locked-In Points. Under this option, the lender lets you lock in both the interest rate and points quoted to you. This option may be considered to be a true lock-in because your mortgage terms should not increase above the interest rate and points that you’ve agreed upon even if market conditions change.
Locked-In Interest Rate--Floating Points. Under this option, the lender lets you lock in the interest rate, while permitting or requiring the points to rise and fall (float) with changes in market conditions. If market interest rates drop during the lock-in period, the points may also fall. If they rise, the points may increase. Even if you float your points, your lender may allow you to lock-in the points at some time before settlement at whatever level is then current. (For instance, say you’ve locked in a 10½ percent interest rate, but not the 3 points that went with that rate. A month later, the market interest rate remains the same, but the points the lender charges for that rate have dropped to 2½. With your lender’s agreement, you could then lock in the lower 2½ points.) If you float your points and market interest rates increase by the time of settlement, the lender may charge a greater number of points for a loan at the rate you’ve locked in. In this case, the benefit you might have had by locking in your rate may be lost because you’ll have to pay more in up-front costs.
Floating Interest Rate--Floating Points. Under this option, the lender lets you lock in the interest rate and the points at some time after application but before settlement. If you think that rates will remain level or even go down, you may want to wait on locking in a particular rate and points. If rates go up, you should expect to be charged the higher rate.
Because practices vary, you may want to ask your lender whether there are other options available to you.
How Long Are Lock-Ins Valid?
Usually the lender will promise to hold a certain interest rate and number of points for a given number of days, and to get these terms you must settle on the loan within that time period. Lock-ins of 30 to 60 days are common. But some lenders may offer a lock-in for only a short period of time (for example, 7 days after your loan is approved) while some others might offer longer lock-ins (up to 120 days). Lenders that charge a lock-in fee may charge a higher fee for the longer lock-in period. Usually, the longer the period, the greater the fee.
The lock-in period should be long enough to allow for settlement, and any other contingencies imposed by the lender, before the lock-in expires. Before deciding on the length of the lock-in to ask for, you should find out the average time for processing loans in your area and ask your lender to estimate (in writing, if possible) the time needed to process your loan. You’ll also want to take into account any factors that might delay your settlement. These may include delays that you can anticipate in providing materials about your financial condition and, in case you are purchasing a new house, unanticipated construction delays. Finally, ask for a lock-in with as few contingencies as possible.
What Happens If the Lock-in Period Expires?
If you don’t settle within the lock-in period, you might lose the interest rate and the number of points you had locked in. This could happen if there are delays in processing whether they are caused by you, others involved in the settlement process, or the lender. For example, your loan approval could be delayed if the lender has to wait for any documents from you or from others such as employers, appraisers, termite inspectors, builders, and individuals selling the home. On occasion, lenders are themselves the cause of processing delays, particularly when loan demand is heavy. This sometimes happens when interest rates fall suddenly.
If your lock-in expires, most lenders will offer the loan based on the prevailing interest rate and points. If market conditions have caused interest rates to rise, most lenders will charge you more for your loan. One reason why some lenders may be unable to offer the lock-in rate after the period expires is that they can no longer sell the loan to investors at the lock-in rate. (When lenders lock in loan terms for borrowers, they often have an agreement with investors to buy these loans based on the lock-in terms. That agreement may expire around the same time that the lock-in expires and the lender may be unable to afford to offer the same terms if market rates have increased.) Lenders who intend to keep the loans they make may have more flexibility in those cases where settlement is not reached before the lock-in expires.
How Can You Speed Up the Approval of the Loan?
While the lender has the greatest role in how fast your loan application is processed, there are certain things you can do to speed up its approval. Try to find out what documentation the lender will require from you.
Much of the information required by your lender can be brought with you when you apply for a loan. This may help to get your application moving more quickly through the process. When you first meet with your lender, be sure to bring the following documents:
The purchase contract for the house (if you don’t have the contract, check with your real estate agent or the seller).
Your bank account numbers, the address of your bank branch and your latest bank statement, plus pay stubs, W-2 forms, or other proof of employment and salary, to help the lender check your finances.
If you are self-employed, balance sheets, tax returns for 2-3 previous years, and other information about your business.
Information about debts, including loan and credit card account numbers and the names and addresses of your creditors.
Evidence of your mortgage or rental payments, such as cancelled checks.
Certificate of Eligibility from the Veterans Administration if you want a VA-guaranteed loan. Your lender may be able to help you obtain this.
Be sure to respond promptly to your lender’s requests for information while your loan is being processed. It is also a good idea to call the lender and real estate agent from time to time. By calling occasionally, you can check on the status of your application, and offer to help contact others such as employers who may need to provide documents and other information for your loan. It is also helpful to keep notes on your contacts with the lender so that you will have a record of your conversations.
Ask About Lock-Ins
When you’re ready to settle on your loan, you’ll want to get the loan terms that you’ve locked in. To increase that likelihood, it is important to learn as much as you can about what the lender is promising you before you apply for a loan. Ask for the following information when you shop for a loan:
Lock-Ins and Fees
Does the lender offer a lock-in of the interest rate and points?
When will the lender let you lock in the interest rate and points? When you apply? When the loan is approved?
Will the lock-in be in writing? If the lock-in is not in writing, you will have no record of the lender’s agreement with you in case of a dispute.
Does the lender charge a fee to lock in your interest rate? Does the fee increase for longer lock-in periods? If so, how much?
If you have locked in a rate, and the lender’s rate drops, can you lock in at the lower rate? Does the lender charge you an additional fee to lock in the lower rate?
Can you float your interest rate and points for now, and lock them in later?
Loan Processing Time
How long does the lender expect to take to process your loan?
What has been the lender’s average time for processing loans recently?
Has the lender’s loan volume increased? Heavy volume might increase the lender’s average processing time.
Expiration of Lock-ins
What rate will be charged if the lock-in expires before settlement-the rate in effect when the lock-in expires?
If you don’t settle within the lock-in period, will the lender refund some or all of your application or lock-in fees if you decide to cancel the loan application?
If your lock-in expires and you want to get another lock-in at the rate in effect at the time of the expiration, will the lender charge an additional fee for the second lock-in?
Complete Guide to Locking in a Kentucky Mortgage Rate
Master mortgage rate locks and secure the best terms for your loan
📋 Table of Contents
What Is a Mortgage Rate Lock-In?
A mortgage rate lock-in, also called a rate-lock or rate commitment, is a lender's formal promise to hold a specific interest rate and a predetermined number of points for your loan during the application and processing period. This agreement typically remains in effect for a specified timeframe while your application is being evaluated.
Key Point: Points are additional charges imposed by the lender, typically equal to one percent of the loan amount. They can be prepaid at settlement or financed by adding them to your mortgage amount.
When you apply for a mortgage, the quoted terms may only be valid at that moment. Market conditions can change significantly over weeks or months during processing. A rate lock-in protects you from rate increases during this critical period.
Why Lock-In Matters for Your Mortgage
Lenders typically need several weeks or longer to prepare, document, and evaluate your loan application. During this time, mortgage costs and market conditions can shift dramatically. Here's why a lock-in is crucial:
- Rate Increase Protection: You're protected against rising interest rates while your application is processed
- Affordability Certainty: You know exactly what your monthly payments will be, helping with financial planning
- Budget Stability: Protected from unexpected cost increases that could affect your ability to afford the mortgage
Lock-In Options Available to You
Lenders offer different options for establishing your interest rate and points. Understanding these options helps you choose the best strategy for your situation.
1. Locked-In Interest Rate with Locked-In Points
This is the most comprehensive option. Your lender locks in both the interest rate and points you'll be charged. This is considered a "true lock-in" because your mortgage terms won't increase above the agreed-upon rate and points, regardless of market changes. This option provides maximum protection but may come with higher fees.
2. Locked-In Interest Rate with Floating Points
Your lender locks your interest rate, but allows points to rise and fall with market conditions. This option offers flexibility because:
- If market interest rates drop, points may also decrease
- If rates rise, points may increase accordingly
- You typically can lock in points later at any level you choose
However, if market interest rates increase by settlement, you may pay significantly more in upfront costs, potentially negating the benefit of locking in your rate.
3. Floating Interest Rate with Floating Points
This option allows you to lock in your interest rate and points at any time after application but before settlement. This approach works best if you believe rates will remain stable or decrease. If rates rise, expect to be charged the higher prevailing rate.
Pro Tip: Ask your lender if they offer additional options beyond these three standard choices. Practices vary significantly among lenders.
How Long Are Lock-Ins Valid?
Lock-in periods vary based on lender practices and your specific loan. Understanding the typical duration and how to calculate the right length for your situation is essential.
Typical Lock-In Periods
- Standard Range: 30 to 60 days (most common)
- Short Periods: As brief as 7 days after loan approval
- Extended Periods: Up to 120 days or longer
Choosing the Right Lock-In Length
Your lock-in period should be long enough to allow for settlement and any contingencies the lender imposes. Before deciding, you should:
- Find out the average loan processing time in your Kentucky area
- Ask your lender to provide a written estimate of the time needed for your specific loan
- Account for potential delays in providing financial documents
- Consider construction delays if you're purchasing a new home
- Request a lock-in with as few contingencies as possible
Understanding Lock-In Fees
Many lenders charge fees for locking in your interest rate and points. Understanding how these fees work is critical to your overall mortgage costs.
How Lock-In Fees Are Structured
- Upfront Fees: Charged when you lock in, sometimes non-refundable if you withdraw
- Settlement Fees: Charged at closing
- Flat Fee: A fixed dollar amount
- Percentage-Based: A percentage of your mortgage amount
- Points-Based: A fraction of a percentage point added to your rate
Fee Considerations
Lock-in fees vary among lenders and often depend on the length of the lock-in period. Some important questions to ask:
- Is the fee refundable if your application is denied?
- Do fees increase for longer lock-in periods, and by how much?
- If you want to lock in a lower rate later, is there an additional fee?
| Fee Type | When Charged | Typical Range | Refundable? |
|---|---|---|---|
| Upfront Fee | At application | $200-$500 | Often No |
| Settlement Fee | At closing | $150-$400 | Varies |
| Percentage Fee | Varies | 0.25%-1% of loan | Varies |
What Happens When Your Lock-In Expires?
If you don't settle within your lock-in period, you risk losing your locked rate. Understanding what happens next is crucial for protecting your interests.
Why Lock-Ins Expire
Lock-in expiration commonly occurs due to processing delays, which can happen for several reasons:
- Delays from you in providing required documentation
- Delays from third parties like employers, appraisers, or inspectors
- Delays from the lender themselves, especially during high loan volume periods
- Unexpected construction delays on new properties
What Happens After Expiration
Once your lock-in expires, most lenders will offer your loan based on current market rates and points. If interest rates have risen since your lock-in, you'll pay more for your loan. One reason many lenders cannot honor the original lock-in rate is that they can no longer sell the loan to investors at that rate. However, lenders who plan to keep the loans they originate may have more flexibility in these situations.
Important Question to Ask: What rate will be charged if your lock-in expires before settlement? Will the lender refund some or all application and lock-in fees if you decide to cancel?
How to Speed Up Loan Approval
While lenders control most of the approval timeline, you can take actions to accelerate the process and reduce the risk of your lock-in expiring.
Documents to Bring When Applying
Gather and bring these documents to your initial meeting with your lender:
- Purchase contract for the house (or contact your real estate agent)
- Bank account numbers, branch address, and latest 2 bank statements and copy of 401k, brokerage, investment accounts from last quarter
- Pay stubs for last 30 days, 2 years of the last two years W-2 forms, or other proof of employment for last two years and salary
- If self-employed: balance sheets, 2 years of tax returns, and business information
- Information about all debts, including loan and credit card account numbers
- Evidence of mortgage or rental payments (cancelled checks)
- Certificate of Eligibility from Veterans Administration (if seeking VA-guaranteed loan)
Ongoing Actions During Processing
- Respond Promptly: Reply quickly to lender requests for additional information
- Stay in Contact: Call your lender and real estate agent periodically to check application status
- Help Connect Parties: Offer to help contact employers and others who need to provide documents
- Keep Records: Document all conversations with dates and details for future reference
Essential Questions to Ask Your Lender
Before you apply for a mortgage, arm yourself with knowledge by asking these questions about lock-in terms and conditions.
About Lock-Ins and Fees
- Does the lender offer a lock-in of both interest rate and points?
- When can you lock in—at application, loan approval, or later?
- Will the lock-in agreement be provided in writing?
- What fees are charged for lock-ins, and how much do they increase for longer periods?
- If rates drop, can you lock in at the lower rate? Is there an additional fee?
- Can you float your rate and points initially, then lock them in later?
About Loan Processing Time
- How long does the lender typically take to process loans?
- What has been their average processing time recently?
- Has loan volume increased, and might this affect processing time?
About Lock-In Expiration
- What rate applies if your lock-in expires before settlement?
- Will the lender refund your application or lock-in fees if you cancel?
- If you want a second lock-in at the prevailing rate after expiration, will there be an additional fee?
Pro Tip: Request written responses to these questions. Written documentation protects you and provides a reference if disputes arise.
Secure Your Mortgage Rate Today
Understanding rate lock-ins empowers you to make informed decisions about your Kentucky mortgage. Don't settle without one!
Explore Kentucky Loan Programs
- Kentucky FHA Loans – flexible credit and 3.5% down for qualified buyers.
- Kentucky VA Loans – zero down for eligible Veterans and Service Members.
- Kentucky USDA Rural Housing Loans – zero down in eligible areas with income limits.
- KHC Down Payment Assistance – statewide assistance that can pair with FHA, VA, USDA, and Conventional.
Kentucky Mortgage Rate Lock — Frequently Asked Questions
What is a mortgage rate lock?
A rate lock (lock-in) is your lender's written promise to hold a specific interest rate and points for a set period—typically 30–60 days—while your loan is processed.
When should I lock my rate in Kentucky?
Once your application is complete and you're confident the timeline fits the lock period. High-demand files (KHC DPA, USDA manual UW, new construction) often warrant 45–60+ days.
How long can I lock my rate?
Common options are 30, 45, 60, and sometimes 90–120 days. Longer locks usually cost more.
What if rates drop after I lock?
Ask about a "float-down." Some lenders let you move to a lower rate (often once, with rules/fees). Not all programs offer it.
Is there a fee to lock or extend?
Sometimes. Fees vary by lender, program, and lock length. Extensions typically carry a fee.
What happens if my lock expires?
If you don't close in time, pricing usually reverts to current market rates, or you pay an extension fee—whichever your lender allows.
Do FHA, VA, USDA, and KHC locks work differently?
The lock mechanics are similar, but timelines can differ. KHC and USDA manual underwriting can add time; plan your lock accordingly.
Final Thoughts
A mortgage rate lock-in is one of the most valuable tools available to borrowers. It protects you from market fluctuations while your loan is being processed, ensuring you can afford your new home and maintain your financial stability. Take time to understand the options available, ask the right questions, and document all agreements in writing. Your diligence now can save thousands of dollars over the life of your mortgage.
LOAN PROGRAMS AND APR ASSUMPTIONS
Conventional Loan Rates are based on a 15-day lock and you must escrow. Government Loan Rates are based on a special 15-day lock and you must escrow.
Conventional loan escrow waiver and extended rate locks are available, please call.
Conforming Loans
APR calculation assumes a $250,000 purchase price and a $200,000 loan amount with a 20% down payment. Discount and origination may be charged, if applicable. If the down payment is less than 20%, mortgage insurance may be needed on the loan. Mortgage insurance, discount, and origination charges could increase the monthly payment and the APR.
FHA Loans
The base loan amount assumed a 3.5% down payment on a $200,000 purchase price. APR calculation assumes a $196,377 loan amount ($193,000 base loan amount plus $3,377.00 up-front mortgage insurance premium). Up-front mortgage insurance premium, monthly mortgage insurance, plus discount and origination may be charged, if applicable. This could increase the monthly payment and the APR.
VA Loans
The base loan amount assumes 100% financing on a $200,000 purchase price. The actual loan amount assumes a funding fee percentage based on the veteran’s first usage of entitlement. APR calculations assume a $204,600 loan amount ($200,000 base loan amount plus $4,600 first time use Veteran VA Funding Fee). Discount and origination may be charged, if applicable. This could increase the monthly payment and the APR.
USDA Loans
The base loan amount assumed 100% financing on a $200,000 purchase price. The actual loan amount assumes the guarantee fee is 1% of the loan amount. APR calculations assume a $202,020 loan amount ($200,000 base loan amount plus $2,020.20 Guarantee Fee which only $2,020 can be financed), USDA Annual Fee of $58.34 per month. Discount and origination may be charged, if applicable. This could increase the monthly payment and the APR.
Joel Lobb
Senior Loan Officer
(NMLS#57916
text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com
http://www.federalreserve.gov/pubs/lockins/default.htm