Most rate locks are intended to protect homebuyers from rate increases while their loan application is processed.  Those refinancing their mortgage can also benefit from rate locks.

Rate locks keeps borrowers from being under the mercy of mortgage lenders the rates move. That means that a 5.6 percent rate when you begin the loan application process may rise to 6 percent by the time the loan closes.

Aside from the interest cost, an increase in interest rates may cause you to pay more points that you have to put more cash down payment. An increase in interest rates may mean higher monthly payments so as to keep your monthly payments in line with what you can afford or what the lender will allow.

So if you are in the process of purchasing or refinance a mortgage and thinking of rate locks, here are some tips that can be helpful.

1. Take time to compare terms and rates. The mortgage industry has many players competing against each other. Lenders are trying to outdo each other in providing favorable rates and terms.
2. Make sure that the mortgage lenders and/or brokers you are dealing with are licensed.
3. Get the rate lock commitment in writing and make sure that you have a copy of the commitment from the mortgage lender, bank or credit unions and not the broker or agent.
4. Only mortgage lenders, banks, or credit unions are authorized to issue rate lock commitments. Mortgage brokers are not allowed to issue rate lock commitments.
5. However, a mortgage broker can arrange a rate lock in writing from the actual underwriting lender. Always ask for a copy of the rate lock commitment from the underwriting lender.
6. Provide all documentation to your lender or broker in a timely fashion. Throughout the mortgage application process, provide all required documentation to your lender or broker in a timely fashion and well before the rate lock expires.
7. Once you lock-in a rate, stay  in close contact with lender or broker often throughout the mortgage application process and make sure that the application is progressing smoothly and quickly as you expect.
8. Pay attention to deadlines. A lender is expected to honor a rate lock but if you fail to complete your home purchase or don't refinance before the rate lock term expires, you'll have to pay any increased rate, along with any other increased costs. However, some leeway or exceptions are given if the borrower is not at the fault.