When rates start going up, you should look at locking in your rate.

One of the worst surprises can be getting to closing and finding that your interest rate has increased. In fact, many potential homeowners don't have any room for increases in interest rates.

"Anytime rates go up, rate locks are an issue. If you don't lock in your rate, then your rate is floating with the market," explains Jack Guttnetag, finance professor emeritus at the University of Pennsylvania's Wharton School.

Traditionally, locking in your rate is the lender's guarantee that your mortgage carries a specific interest rate, points and other terms. Make sure that you get it in all in writing. Don't just take the lender's word that rates won't go up.

The lock on the rate will be good for a specific amount of time. If you don't close before the time is up, then you will be facing rising interest rates.

"This is mainly a problem with a home purchase because a home buyer has so much at stake and is at the mercy of the market price as defined by the loan officer. If you get to closing and find someone has been playing games and things are not what you agreed to and you don't have a rate lock, you are in a vulnerable position. If you are refinancing, you have options. You don't lose the house if you don't close on the scheduled date," said Guttnetag.

If interest rates fall during the lock period, you lose out on the decrease in rate. You may be able to rewrite your lock, but you should expect it to cost you extra.

Some lenders offer what is called a "float down" option that will grant you with a lower rate if rate fall. While most locks are designed for the borrower's benefit, some may not, so make sure that you understand everything in the lock agreement before you sign.

The contract should include a lock on as many of the costs as possible, including the interest rate and points. It should include your name, the lender's name, the effective date and rate, the lock cost, what rate and terms are locked, the expiration date and time and any post-lock options.

Check to make sure that the rate you are locking in is the rate that was quoted to you on your application.

The length of the lock should allow for the settlement, contingencies and potential delays. Most locks average 30 days, but you will find them from 15 to 60 days. Ask about the average time for processing your loan and get an estimate from your agent on how long closing should take.

Once you lock in the rate, you need to make sure that you are approved and closed before the contract expires. If you have a floating lock, make sure that you keep your eye on the market to see if it has gone down.

A lock will cost you money. Like a mortgage, shop around for the terms and the cost. Some lenders will charge you even if you don't close on the mortgage with an up-front fee. Others charge a fee at settlement. It could be a flat fee, a percentage of the mortgage amount, a fraction of a percentage point or a higher interest rate. The cost could vary depending on the lock, the options you choose and the mortgage program.