DEFINITION of 'Mortgage Rate Lock Deposit'
A fee that a lender charges a borrower that allows the borrower to lock in an interest rate for a certain time period with the expectation that the borrower's mortgage will fund within that time period. The longer the lock period, the larger the required lock deposit. The lock deposit is credited to the borrower when the mortgage funds. If the borrower walks away from the lock agreement, he or she loses the lock deposit.
BREAKING DOWN 'Mortgage Rate Lock Deposit'
Many lenders do not charge lock deposits as borrowers tend to shy away from them. However, borrowers should recognize that as with all things financial, "there is no free lunch", and a reputable lender that requires a lock deposit may be able to offer a lower interest rate.