It’s back! Long ago rolled out and put on the shelf, lock and shop is back in the forefront of homebuyer’s minds. What is lock and shop? As the name implies, lock and shop, is a rate lock program that allows a homebuyer to guarantee their interest rate before finding a home to purchase. That’s right – the lender allows a 60 or a 90-day rate lock on a home loan with a property address that is yet to be determined.

The homebuyer must have a home under contract within thirty days of the rate lock expiration. Once the home is under contract, the loan follows the normal process to closing. What does this cost? No up front out-of-pocket charges are incurred by the buyer. What if rates drop between the initial lock and contracting for a house? The lender will offer you the current market rate.

If you are in the market for a new home and with interest rates on the rise, why wouldn’t you take advantage of a rate lock program? Here is the main reason: the lock and shop is a guaranteed rate based upon either the 60-day or 90-day rate lock. The 60 and 90-day rate locks are slightly more expensive than 30 or 45-day rate locks. The longer the rate lock duration, the higher the interest rate offered, or a larger rate fee is charged at closing. At the current time, once you have a home under contract, a 30 or 45-day rate lock is sufficient time to close your home loan.

So, the takeaway on the lock and shop program is this: if you plan on purchasing a home in the next ninety days, protect yourself with a lock and shop program offered by a reputable mortgage broker.

At The Mortgage House in Joplin, MO, we offer the lock and shop to prospective homebuyers. Having been in business since 1994, The Mortgage House has a long list of former clients that can attest to our integrity before, during and after the home buying process.