Can You Lock Rates With Multiple Lenders?

A mortgage rate lock offers borrowers a way to secure the interest rate on a home loan for a set period. This mechanism provides stability, shielding the borrower from potential rate increases during the loan processing and closing phases. It ensures the interest rate committed remains consistent, assuming all other loan application details also remain unchanged.

The Rate Lock Process

A rate lock, when engaged with a single lender, involves several components: the specific interest rate, any associated points, and the duration of the lock period. Points, also known as discount points, are a fee paid to the lender at closing, typically 1% of the loan amount per point, in exchange for a reduced interest rate over the loan’s life. This upfront payment can lower monthly mortgage payments. Rate lock periods commonly range from 30 to 60 days, though shorter or longer periods, such as 10 to 120 days, may be available.

The decision to lock a rate usually occurs after pre-approval or an accepted property offer. It represents a commitment from the lender to honor the agreed-upon interest rate for the specified timeframe, provided the borrower fulfills all loan conditions. While a rate lock protects against rising rates, it generally prevents the borrower from benefiting if market rates decrease during the lock period, unless a “float-down” option is part of the agreement. Some lenders may charge a fee for the rate lock itself, or the cost might be integrated into the offered interest rate.

Submitting Multiple Loan Applications

Borrowers are permitted to submit loan applications to multiple lenders as part of the comparison shopping process. This practice allows individuals to evaluate different offers, comparing interest rates, loan terms, and associated fees from various financial institutions. The process involves providing each lender with financial information, such as income, credit history, and property details.

Lenders typically view multiple applications within a short timeframe as prudent comparison shopping rather than an indication of financial distress. The objective is to find the most favorable terms for a mortgage, which can potentially save money over the life of the loan. While a borrower can apply to several lenders, only one mortgage loan can ultimately be closed for a single property.

Costs and Credit Considerations

Submitting multiple loan applications can incur financial and credit-related implications. Some lenders may charge non-refundable application fees, which can range from $0 to $500, to cover the processing and underwriting costs. Another potential cost is the appraisal fee, which may be required by each lender to assess the property’s value. These fees, if charged by multiple lenders, can accumulate.

Regarding credit scores, each loan application typically results in a “hard inquiry” on a credit report. While hard inquiries can slightly lower a credit score, usually by less than five points, credit scoring models recognize that consumers shop around for mortgages. Therefore, multiple inquiries for the same type of loan, such as a mortgage, made within a specific window—often between 14 and 45 days—are generally treated as a single inquiry. This allows borrowers to compare offers without significantly impacting their credit score, provided the applications occur within this concentrated period.