What the difference with these mortgage loan terms?

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What the difference between being pre-approved and locking in a rate?
If you lock in a rate, does that mean the loan is yours?
Or is the process still on going?

  1. Reply
    Lisa L
    April 30, 2011 at 12:58 am

    Pre-approved means they have enough info to make a decision. However, if there are conditions or subject to’s on it, it is not set in stone. Most lenders don’t like to lock a rate until they have all they need. The loan is NEVER yours until you sign the paperwork.

  2. Reply
    GI Jane
    April 30, 2011 at 1:36 am

    Pre-approved means as long the information you provided is correct and up to date, you’ll likely get the loan you’re requesting.
    Locked in rate means the interest rate the bank is telling you will not change during the duration of the pre-approval letter.
    No, locking in a rate does not mean the loan is yours, just means they are promising you that rate, again only during the duration of the pre-approval letter.. For example: Say your pre-approval is for 60 days (you have to find a home in 60 days) the rate is locked for the time frame, if you do not find a home within that time, the rate can change.

  3. Reply
    April 30, 2011 at 2:05 am

    Also keep in mind, the longer you lock a rate in, the higher it will be.

    If you want to lock in todays rate say 5%, for 30 days, they may add .25% as a cost to hold the rate for that duration and charge 5.25% instead. The longer the duration, 60 days and so forth, the more the additional % points the bank will add. Bottom line, don’t lock it in too long.

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