Know your lender-and don't forget old-fashioned horse-trading.

It pays to know every trick in the book about how your clients can lock in a good mortgage rate when rates rise.

A rate increase today is apt to hurt more than it did six or seven years ago, notes David Olson, managing director of Wholesale Access, a Columbia, Md.-based mortgage research firm. That's because lenders, citing prepayments due to refinancings, are pricing about 75 basis points more into 30-year fixed-rate mortgage rates then they did prior to 1997. Today, you can expect to pay 200 basis points more than the benchmark ten-year Treasury note.

So what can you do to cut the damage of rising mortgage rates?

Check out a lender's rate breakpoints. Mortgages may have breakpoints on rates based upon the amount borrowed, advises Christopher Zehnder, a CFP licensee in St. Cloud, Fla. Zehnder, who served as a mortgage banker for 15 years, says that if your client is interested in borrowing $98,000, it could pay to borrow $100,000 if $100,000 is a breakpoint for a lower rate. Rates may drop at certain intervals as the borrowed amount rises, he says. Conversely, if your client borrows too little, the rate might be higher because it costs more for the lender to process.

Try to negotiate a shorter "lock-in period" for your client. But beware. If the lender fails to close in that time frame, the rate jumps to market. Many banks, he says, will offer "lock-in" periods for seven, 30, 45 or 90 days. The shorter the lock-in period, the lower the rate.

Avoid locking in a mortgage rate on Fridays. Many lenders, may keep rates artificially high over the weekend, Zehnder says. They're fearful of having to honor the large number of rates obligated on Friday, Saturday and Sunday if the market moves dramatically on Monday.

"Look at the bond market," Zehnder adds. "If the bond market is up, sometimes the rate will fall the following day."

Use the Internet and newspaper information. Play one lender against the other. In an active rate environment, a mortgage broker or banker may cut his commission to close the deal. A lender, he says, typically figures it's better to earn something than nothing.

Consider a "hybrid" mortgage. Such mortgages, with rates that are fixed for three, five or seven years before becoming subject to annual changes, could lock in a lower rate for a specified period.

Make certain your client has checked and corrected his or her credit report before searching for a mortgage. Daniel Mulligan, a San Francisco-based consumer lending attorney, says he was surprised at the very attractive mortgage pricing he saw one person obtain from Bank of America in Charlotte, N.C.. The reason: Larger banks use risk-based pricing and lower rates for their most creditworthy customers.

Check out Countrywide, Wells Fargo, Washington Mutual and ABN Amro, which does business through InterFirst Mortgage and Standard Federal and LaSalle banks. Some of these mortgages may be sold through mortgage brokers. Olson says these lenders are about the most aggressive pricers nationally. "On any given day, one or another would have very aggressive rates," he says. "They've been willing to sacrifice short-term profits for long-term market share." But don't expect rates on all their mortgage products to be equally attractive. Keep in mind that service is just as important as rate. If your client's lender fails to pay your client's property taxes on time, your client could be hit with the fine.

If your client is not expecting to prepay a mortgage, he or she might ask the lender for a prepayment penalty in exchange for a lower rate. Some lenders may be willing to lop off one-quarter to one-half of a percentage point from the rate, Olson says. Better yet: Seek a "soft" prepayment penalty, suggests Zehnder. This means your client gets a rate cut but only suffers the prepayment penalty if he or she refinances. With a "soft" penalty, there is no prepayment penalty for selling the home and moving.

Thrifts historically have offered lower-rate and lower-cost ARMs, notes Keith Gumbinger, vice president for HSH Associates, Butler, N.J. Mortgage brokers are more aggressive on fixed-rate loans.

Experts say that to avoid losing a good rate when rates are rising, your clients need to be sure to get confirmation of the rate lock in writing. Mulligan says your client also needs to give "consideration" for the rate lock. Ten years ago, according to Mulligan, a borrower typically could pay cash up front for a rate lock. Today, there may be no fee required. Instead, a borrower may be charged a higher mortgage rate, based on a specified lock-in period. Charles Schwab tells customers that they have the rate and immediately demands closing costs, Mulligan says. "That's at least a form of consideration."

Consideration needn't be a flat fee. However without documentation that your client has paid anything to lock in a rate, there may be no recourse if a lender fails to honor it. This is bad news if rates rise.

Another issue that is important when rates rise: How solid is your client's lender?

In August, Capitol Commerce Mortgage, Sacramento, Calif., abruptly closed its doors. Hundreds of customers in 15 states were left out in the cold just as rates were rising.

Ted Grose, director of consumer research for the California Association of Mortgage Brokers in Sacramento, advises asking a mortgage broker, who may be funding the mortgage from another source, for a copy of that lender's loan confirmation to the broker. This way, your client may stand a chance of obtaining the loan even if a loan originator goes under. "Get periodic status reports from the originator," he adds. "Those can be provided electronically with a competent originator."

It also is a good idea to check on the mortgage company with the state's regulator and the local Better Business Bureau. Know in advance the average time it takes the lender to close a loan and make sure your client closes within that time frame. If given an option, your client might even ask for a lock-in period based on that research.

The good news: It's easier to back out of a high-rate mortgage if rates suddenly drop. "Twenty years ago, loan originators were more aggressive in locking the consumer into a conforming loan," Grose says. But competition has changed that. Often a borrower isn't locked into a loan until loan documents actually are signed, Mulligan says. Even then, the Truth-in-Lending Act offers refinancers a three-day right of recision on the transaction.

Grose says that besides the three-day right of recision, there may be other loopholes that can let a client out of the deal. In California, a borrower needs to provide funds to close. If the borrower doesn't provide the funds, he or she can kiss the mortgage goodbye. "If a client of mine doesn't want a product I've offered them, I don't want them to go through with the transaction," Grose says. "I will help them cancel it. The lender I'm working with may have a penalty for me, but I'm willing to take it because my duty is to my client."

The catch: Even though a borrower may get out of a loan, he or she may lose upfront fees already paid. Grose says the industry trend is for lenders to retain fees equal to their actual expenses.

But not all lenders' policies are firm. It may be possible to get the fees returned or to use them toward obtaining a lower rate through the same originator. As in all aspects of the mortgage transaction, it could pay to do some horse trading with the lender.

Gail Liberman is a licensed real estate agent and mortgage broker in North Palm Beach, Fla.