The APR allows you to compare, in addition to the interest rate, the total cost of financing your loan, among various lenders. This is the interim interest that accrues on the mortgage loan from the date of the loan closing to the beginning of the period covered by the first monthly payment. For example, if your closing date is scheduled for June 15, the first mortgage payment is due August 1. The lender will calculate a per-day interest amount that is collected at the time of closing. This amount covers the interest accrued from June 15 to July 1.
Some lenders prohibit the collection of prepaid interest.
The benefit is the security of knowing that your interest rate is fixed if interest rates should increase. If you are locked in and rates decrease, you will not usually get the benefit of the decrease in interest rates. The benefit to floating a rate is that, if interest rates were to decrease, you would have the option of locking in to a lower rate. Most lenders will allow you to lock in your rate once you have found a property and as late as up to five business days before closing. Some lenders may allow you to lock prior to finding a property.