Should I lock in rate for home loan?

I've been pre-approved for a home loan from my credit union. However, I'm still looking at houses and haven't made an offer yet on any of them. If I lock in the rate of 6.125 with my credit union, I'll have to cough up $500 for the application fee. Should I wait until I've found a house? Also, I want to shop around to try to get the best home loan rate so is it wise to lock in a rate when I'm not sure I even will use my credit union? Also the $500 is refundable if I end up closing the loan with the credit union. This rate is for a 7-Year ARM.

6.125% is an incredible rate if we are talking about a 30 year fixed rate. However, most locks are only 30 days in length so without a home- it probably wouldn't help you to be locked in at this point. I would guess that the 6.125% WAS the rate when you initially were pre qualified for the loan as I find it hard to believe they will still honor that rate. Finally, I would NEVER pay an application fee to anyone for anything. It is a complete junk fee to get them paid if you do not close the loan with them. No money is needed on a standard rate lock. Find your home, shop for the rate with 3-4 people (be sure to ask the Credit Union if that rate is still available as I'm guessing it is not), choose your lender and go from there. Don't compare closing costs as they are generally the same regardless of lender outside of application fees and/ or origination and broker fees.

Why is the home equity loan rate going up while mortgage rate is going down?
For at least the last couple days? is there chance home equity loan rate goes down?
The two are not the same and have nothing to do with each other. The prime rate has gone up many times lately so all loan rates will follow. When you borrow money to buy a home the bank is not the one that loans you the money. Companies bid for these mortgages and when they have a lot of money that needs to be earning something then the rate will go down. When the money is tight then the rate will go up. They will tell the bank they will buy so many millions of dollars worth of mortgages at a given rate. There are several so the rates may not be all the same. Depending on your history the bank and holding co. will decide what company will take the risk.