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If you are purchasing a home and have selected a lender and been given a Good Faith Estimate, then it is always a good idea to consider locking in your interest rate.  A traditional rate lock is a lender's guarantee that your mortgage will be at a specific interest rate with other costs and terms.  Most locks are designed to protect home buyers from rising rates, but those refinancing can also benefit from the same process. 

In a changing market, especially when the change is for the worst, a lock may be crucial in order to keep your rate and payment at a level where you are comfortable.

During the first half of 2008, the high of 6.45 percent in recent weeks was one point above the low of 5.48 percent in January.

A rate lock's terms include a specified period for the lock. If you fail to complete your home purchase or refinance before the lock runs out, and interest rates rise, brace yourself for higher costs.

In an up-and-down interest rate market, falling interest rates are another strong reason for a rate lock.  If interest rates fall during the lock period you can't take advantage of the lower rate unless you rewrite the lock at additional cost or include a "float down" provision in the original lock. The "float down" option grants you a lower rate if rates fall within a given window of time. Again, unless specified otherwise, float downs stick you with the higher rate if rates rise during the lock period.

Get it all in writing. It's difficult to enforce a verbal agreement.

The contract should lock in the interest rate, points and other costs, where possible. The agreement should include the lock's effective date, lock cost, what terms are locked, the lock's expiration date and time, and any post-lock options.

Lock upon application if you get a desirable rate so that your rate is locked as you spend time getting the application approved. That's particularly important if an increase would make buying unaffordable.  Or, you can always lock later in the process.  My web site gives a current lock recommendation.

Locks average 30 days, but can be obtained for longer periods, however, the interest rate could be higher for a longer lock.  Once you lock your rate, be sure and submit all documents required by the lender so your loan will be ready by the end of the lock period.  Note the lock length and make sure your lender completes the process within this time period.