Getting an interest rate quote and getting that rate guaranteed are two different breeds. Also, rate quotes can vary depending upon how much time you have until you close. Or at least they should be. Interest rates and time go hand in hand, the longer you need, the more expensive it gets.

Locking in your interest rate means two things; your rate won't go up if rates in general go up, and your rate won't go down if rates in general go down. When you lock, you lock. I know there are variations on this theme such as "floatdown" loans that allow you to re-lock your rate should rates move down during your lock period, but overall lenders take interest rate locks just as seriously as you do.

The most important feature of a lock is that it lasts long enough to get your deal closed. If your closing is scheduled within 30 days, then you need a 30 day lock. If your closing is within 15 days, then you might get a 15 day lock. 15 day locks are less expensive than 30 day locks. How much? Usually about 1/8 of a discount point. On a $100,000 loan, that's about $125 more to lock for 30 days than for 15.

Do you have a longer escrow period, say 60 days? If you want to lock in current market rates, then you can expect to pay more in either rate or point. For each additional 30 days, you can expect another ¼ of a discount point, or maybe 1/8 percent in interest rate.

This is why it's vitally important when getting rate quotes for the same lock period. Don't call some lender up and ask them what their rates are, ask them what their rates are for the time needed to close your deal. Another sneaky loan officer trick? Quoting ultra-low rates for very short terms, such as three days. "Yeah, I've got 4.50 percent today but that's only for loans that are closing this week. If I had your loan I could get you that rate, but I really can't lock in your deal unless I've got your loan." You then assume that "Why goodness, these people are lower than anyone else!" so you submit your loan, then find out that their rates are, in fact, pretty much the same, if not higher, than all the other lenders.

Another version of this rate trick is reserved for those who are buying new construction. Say your new home will be finished six months from today, so you call other lenders for rate quotes and you find out that, yes, you can lock in a rate for six months but it gets rather pricey, so you decide to wait.

But one lender in particular has interest rates almost ½ percent lower than everyone else. "Why yes, Mr. New Home Buyer, my rate today is 4.50 percent, but unfortunately I can't lock that rate in that long. But if you go ahead and submit your loan and application fee, I can get you in process and lock you in the closer we get." You may find that as you get closer to your lock period, that lenders rates are just like everyone else's, except for the fact that if you change lenders, you've lost your application fee. Sort of like application fee hostage.

When getting a rate quote for new construction, don't tell the loan officer that you're closing in four to six months. Instead ask for a rate quote for 30 days. It's impossible to compare apples and apples without making the time factor equal as well. After all, time is indeed money, right?

Published: May 13, 2005

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, a veteran Mortgage Banker, successful Real Estate Consultant and author of Your Guide to VA Loans, Mortgages 101: Quick Answers to Over 250 Critical Questions About Your Home Loan, Who Says You Can't Buy a Home!, and Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You, is a former columnist and Contributing Editor with San Diego-based Mortgage Originator Magazine. Reed is President of CD Reed Mortgage Bankers, Austin, TX and is a Past President of the Austin Mortgage Bankers Association.