A rate lock is the lender's promise to hold a specific interest rate and price for a set period while your loan is processed. If rates rise during the lock, your rate doesn't change.
How Long a Lock Lasts
Common lock periods are 30, 45, or 60 days. Longer locks usually cost a little more, because the lender is holding the rate for longer. Pick a period that comfortably covers your expected closing date, with some cushion.
When Can You Lock?
Usually once you've applied and, on a purchase, have a property under contract. Some lenders offer locks before you find a home, often for a fee.
What Can Change a Locked Rate
A lock covers your scenario as it was priced. If something changes, the price can change too:
- Your credit score comes in lower than estimated
- The appraisal changes your loan-to-value
- The loan amount, property type, or occupancy changes
- For a rental loan, the DSCR comes in lower than expected
If Your Lock Expires
If closing is delayed past the lock, you can usually extend it for a fee, or relock at current pricing, which could be better or worse.
Float-Downs
Some lenders offer a float-down option: if rates fall significantly after you lock, you can take the lower rate once. It isn't automatic and may cost extra, so ask before you lock.
Should You Lock Now or Wait?
No one can predict rates reliably. If today's payment works for your budget, locking removes the risk of a rise. If you choose to float, decide in advance what you'll do if rates move against you.
Rate Lock FAQ
When should I lock my mortgage rate?
Usually once you're under contract and the payment works for your budget.
What happens if my rate lock expires?
You can usually extend it for a fee or relock at current pricing.
Can I lower my rate after locking?
Only if your lender offers a float-down option, which may cost extra.
In the financial industry since 2015. Licensed loan officer in Los Angeles, California. NMLS #1493724, with UTM Financial, LLC (NMLS #2591548). More about Ivan
This article is general education, not financial, tax, or legal advice. Loan guidelines vary by lender and change often. Not a commitment to lend.