When getting a home loan, there are several steps to go through. One of them is locking in your mortgage rate. You don’t actually have to do this before your closing, but it can be a good idea.

Locking in your mortgage rate

When you lock in a rate on a home loan, you state, in writing, that you will pay back the mortgage loan at a particular interest rate. The lender locks in the rate for 15 or 30 or 60 days. Or even a year, depending on whether you have found a home yet, or whether you are just getting mortgage pre-approval before you start looking.

When you lock in a home loan rate, that is your rate. If interest rates move higher, you are protected. If they move lower, though, you might miss out on slightly lower payments.

If you think that mortgage rates will go down before you close, you might consider keeping your rate on a "float." This way you can take advantage of the lower rate. It is worth noting that many lenders charge a fee if you go back to a float after locking in your mortgage rate.