The lock-in period should be long enough to allow for settlement

... and any other contin­gencies imposed by the lender, before the lock-in expires. Before deciding on the length of the lock-in to ask for, you should find out the average time for processing loans in your area and ask your lender to estimate (in writ­ing, if possible) the time needed to process your loan. You’ll also want to take into account any factors that might delay your set­tlement. These may include delays that you can anticipate in providing materials about your financial condition and, in case you are purchasing a new house, unanticipated con­struction delays. Finally, ask for a lock-in with as few contingencies as possible.

What Happens If the Lock-in Period Expires?

If you don’t settle within the lock-­in period, you might lose the interest rate and the number of points you had locked in. This could happen if there are delays in processing whether they are caused by you, others involved in the settlement process, or the lender.

For example, your loan approval could be delayed if the lender has to wait for any documents from you or from others such as employers, appraisers, termite inspectors, builders, and individuals selling the home. On occasion, lenders are themselves the cause of processing delays, particularly when loan demand is heavy. This sometimes happens when interest rates fall suddenly.

If your lock-in expires, most lenders will offer the loan based on the prevailing interest rate and points. If market conditions have caused interest rates to rise, most lenders will charge you more for your loan. One reason why some lenders may be unable to offer the lock-in rate after the period expires is that they can no longer sell the loan to investors at the lock-in rate. (When lenders lock in loan terms for borrowers, they often have an agreement with investors to buy these loans based on the lock-in terms. That agreement may expire around the same time that the lock-in expires and the lender may be unable to afford to offer the same terms if market rates have increased.) Lenders who intend to keep the loans they make may have more flexibility in those cases where settlement is not reached before the lock-in expires.

How Can You Speed Up the Approval of the Loan?
While the lender has the greatest role in how fast your loan application is processed, there are certain things you can do to speed up its approval. Try to find out what documentation the lender will require from you.

Much of the information required by your lender can be brought with you when you apply for a loan. This may help to get your application moving more quickly through the process. When you first meet with your lender, be sure to bring the following documents:
-- The purchase contract for the house (if you don’t have the contract, check with your real estate agent or the seller).
-- Your bank account numbers, the address of your bank branch and your latest bank statement, plus pay stubs, W-2 forms, or other proof of employment and salary, to help the lender check your finances.
-- If you are self-employed, balance sheets, tax returns for 2-3 previous years, and other information about your business.
--Information about debts, including loan and credit card account numbers and the names and addresses of your creditors.
-- Evidence of your mortgage or rental payments, such as cancelled checks.
-- Certificate of Eligibility from the Veterans Administration if you want a VA-guaranteed loan. Your lender may be able to help you obtain this.

Be sure to respond promptly to your lender’s requests for information while your loan is being processed. It is also a good idea to call the lender and real estate agent from time to time. By calling occasionally, you can check on the status of your application, and offer to help contact others such as employers who may need to provide documents and other information for your loan.

It is also helpful to keep notes on your contacts with the lender so that you will have a record of your conversations.

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Ask About LockIns
When you’re ready to settle on your loan, you’ll want to get the loan terms that you’ve locked in. To increase that likelihood, it is important to learn as much as you can about what the lender is promising you before you apply for a loan. Ask for the following infor­mation when you shop for a loan:

Lock-Ins and Fees
-- Does the lender offer a lock-in of the interest rate and points?
-- When will the lender let you lock in the interest rate and points? When you apply? When the loan is approved?
-- Will the lock-in be in writing? If the lock-in is not in writing, you will have no record of the lender’s agreement with you in case of a dispute.
-- Does the lender charge a fee to lock in your interest rate? Does the fee increase for longer lock-in periods? If so, how much?
-- If you have locked in a rate, and the lender’s rate drops, can you lock in at the lower rate? Does the lender charge you an additional fee to lock in the lower rate?
-- Can you float your interest rate and points for now, and lock them in later?

Loan Processing Time
-- How long does the lender expect to take to process your loan?
-- What has been the lender’s average time for processing loans recently?
Has the lender’s loan volume increased? Heavy volume might increase the lender’s average processing time.

Expiration of Lockins
-- What rate will be charged if the lock-in expires before settlement-the rate in effect when the lock-in expires?

-- If you don’t settle within the lock-in period, will the lender refund some or all of your application or lock-in fees if you decide to cancel the loan application?

-- If your lock-in expires and you want to get another lock-in at the rate in effect at the time of the expiration, will the lender charge an additional fee for the second lock-in?