The Advantages of Locking In a Rate : Home Loans: With the market so volatile, it pays to have a lender give you a ‘rate lock’ for a specific period.

The mortgage market is more volatile today than it has been in months or even years. Troubles in the Middle East, wild swings in the price of oil and the specter of a recession are just a few of the factors that are making interest rates gyrate and would-be borrowers sweat.

Since no one can say where interest rates will be next week--much less 30 or 60 days from now--it’s a good idea to seek a “rate lock” if you’re looking to buy a home today or refinance one that you already own.

A rate lock is basically a promise by a lender to give you a loan at a specified rate and on certain other terms within a specified period of time.

For example, if a lender offered you a 30-day rate lock on a 10 1/4% loan with two up-front points, you would be guaranteed those terms for 30 days, even if rates skyrocketed in the next few weeks.

“A rate lock protects you if rates go up between the time you apply for the loan and the time the loan is actually funded,” said Tom Criser, a mortgage broker and president of the Lender’s Center in Thousand Oaks.

Unfortunately, rate locks aren’t as easy to understand as you might think. Since policies regarding locks vary from one lender to the next, you’ll need to ask your loan representative lots of questions to make sure you understand exactly what you have been promised.

Some lenders automatically lock in your rate for 30, 60 or even 90 days from the moment they receive your completed loan application. Others lock it in for only 20 days.

Still others won’t lock it in at all: You get whatever rate they’re offering when the loan is actually approved.

And some lenders charge you for the privilege of locking in a rate, while others don’t.

“We won’t charge you for a 60-day rate lock on an FHA or VA loan, or a 45-day rate lock for a conventional mortgage,” said Ralph Mozilo, executive vice president of mortgage banking giant Countrywide Funding Corp.

“But if you want a rate lock longer than that, we’ll negotiate a fee with you.”

The reason why most lenders charge borrowers for longer-term rate locks is simple: By and large, lenders don’t have any better idea of where rates will be several months from now than their customers do.

If you’re looking for a loan and want to lock in your interest rate, here are some key questions to ask of your loan representative:

* How long will my rate lock last? Again, it could be from as few as 20 days to more than 90. If you’ve been offered extremely good loan terms but the rate lock will last only 20 days, you’ll want to hurry up and fill out the loan application before the lender’s offered rate expires.

* When does the rate lock take effect? Ideally, the promised rate will be good beginning the day you first talk to the lender. But usually, you won’t be offered a firm lock until you have turned in your completed loan-application package. That’s one more reason why you should move quickly to fill out all the paper work if the lender is offering an unusually good loan.

* Will the rate lock cost me anything? It’s important to realize that the best rate locks aren’t always free. For example, if one lender offers to lock in a 10 1/4% rate for free but another offers to lock in a 9 3/4% rate for a $300 charge, give serious consideration to paying the fee and taking the 9 3/4% rate. The savings you enjoy over the life of the loan may offset the money you pay up-front.

* What charges will I incur if my loan isn’t approved or I choose to cancel my loan application? Some lenders will refund most or all of the money you have paid for processing fees and the like if your loan application isn’t approved. But if you voluntarily withdraw your loan application at the last minute, you’ll still probably be billed for the credit report, appraisal and other costs that the lender has already incurred.