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For three years, mortgage brokers and lenders have been awash in paperwork as homeowners rushed to refinance their loans at historically low rates. As a result, it can take as long as 90 days until a loan application is fully processed, nearly three times as long as it used to take.

This delay has frustrated homeowners, who file their paperwork thinking they'll receive one rate, only to receive something completely different months later when the application is finally processed. To avoid surprises, many homeowners have heeded the advice of experts and locked their mortgage rates in advance, coughing up as much as $500 to guarantee a specific rate for an extended period of time, such as 90 days.

But while homeowners pay a premium to ensure a historically low rate, chances are they wasted their money in 2002. Homeowners would be wise to rethink the decision to lock. As the graph of mortgage rates in 2002 indicates, chances were that rates were lower, not higher, 90 days after applying for a loan.

"There's really no sense in paying for an extended lock," said Keith Gumbinger, vice president at rate tracker HSH Associates. "Given the disappointing performance of the economy and the likelihood of low rates, is it really worth the money?"

It might not be -- a rate lock can prove costly even if it's free. Most lenders allow homeowners to lock their rate at no cost for anywhere between 30 and 60 days. But as Gumbinger points out, if homeowners let their rate float, instead of locking, they could have received a lower rate, especially in recent months.

In mid-October mortgage rates jumped from 5.5% to 6% over a two-week span, as stocks rallied and the economic news brightened. It was the first time all year that rates had made a significant upside move, spooking homeowners into locking. But instead of rising to 6.5%, rates reversed direction and slid below 5.5% as the rally and economic strength proved short-lived.

Let's say you locked at $250,000 home loan at 6% in October, giving you a monthly payment of $1,500 and $29,000 in interest charges over the life of the loan. If you'd let the rate float until December instead of locking, you would have gotten a rate of 5.5%, which would save you $80 a month and nearly $30,000 over the life of the loan. Plus, you would have paid $500 on top of that for a lock you didn't need.

This isn't to say that locking a rate is always a bad idea, it's just to say that the decision to lock isn't the open-and-shut case that many make it out to be in the coming months. "Interest rates are already an inexpensive gamble, since they're so low. And we're certainly facing the possibility of downward pressure on rates. If we see a flare up in political activity, you'll probably get a lower rate," said Gumbinger.

Instead of locking, cautious homeowners who want their cake and eat it too should ask for a "float-down." Under a float-down, your mortgage rate will not be allowed to rise above a certain rate for 30, 45 or 60 days. Once the application is completed, if mortgage rates are lower, then you'll be able to take the lowest rate at that time. Unlike a lock, which sets your rate in stone, you'll be able to let your rate "float down," as the name suggests.

Gumbinger says that a charge of $250 is standard on a float-down, but programs vary wildly from bank to bank, with some charging nothing and others charging huge fees.

But as with a rate lock, it's important to make sure you're not wasting $250 on a float down just because you're overly cautious. Loan shoppers would be better off if they understood the factors that can affect rates and act accordingly -- especially with the war in Iraq looming.

"A float-down could help you take advantage of a big downdraft in rates," Gumbinger said, "But the middle of December, rates were only 25 basis points higher than they were on Tuesday morning. Is that worth $250? Probably not."