A rate lock is a lender's guarantee to honor a specific interest rate for a set period while your loan is processed. Because mortgage rates can move daily, locking protects you from an increase between application and closing. Understanding lock periods, costs, and options helps you time it well and avoid an expensive expiration.

What a lock guarantees

When you lock, the lender commits to a particular rate and points for a defined window, commonly 30 to 60 days. If market rates rise during that window, your locked rate is protected, which is the whole point. The lock usually covers a specific loan amount and product, so major changes to your loan can void it. Locks are typically tied to the expected closing date, so you want the period long enough to reach closing.

Lock periods and their cost

Longer lock periods generally cost more, either as a slightly higher rate or an added fee, because the lender bears the risk of rates moving for longer. A 30-day lock is often the cheapest, while a 60- or 90-day lock carries a premium. If your closing timeline is uncertain, paying for a longer lock can be worth it to avoid a scramble at the end. Ask the lender exactly when the lock expires and what happens if closing slips past that date.

Float-downs and the trade-off

A float-down option lets you capture a lower rate if the market drops after you lock, usually for an upfront fee or a slightly higher starting rate. Without a float-down, a locked rate does not benefit you if rates fall; you are committed to the locked rate unless you start over. Float-downs make sense when rates are volatile and you fear locking too early. Weigh the float-down cost against how likely and how large a rate drop you expect.

When a lock expires

If your loan does not close before the lock expires, you may need a lock extension, which usually costs money and grows more expensive the longer you extend. In some cases you must re-lock at current market rates, which can be higher than your original lock. Delays from appraisal, underwriting conditions, or slow document submission are common causes of blown locks. Responding quickly to lender requests and choosing a realistic lock period are the best defenses.

You lock a 6.75% rate for 45 days while your loan is underwritten. Two weeks later market rates jump to 7.25%, but your locked rate holds, saving you on every future payment. If appraisal delays push closing past day 45, you might pay an extension fee of a fraction of a point to keep the 6.75% rate.

Key takeaways

  • A rate lock freezes your rate and points for a set window, commonly 30 to 60 days.
  • Longer locks cost more because the lender carries rate risk for a longer time.
  • A float-down lets you grab a lower rate if the market drops, usually for a fee.
  • If the lock expires before closing, an extension or a costlier re-lock may be required.
  • Match the lock period to a realistic closing timeline and respond to lender requests fast.

Common mistakes

FAQ

Does locking a rate cost money?

A standard lock is often included, but longer locks, float-downs, and extensions typically carry fees or a slightly higher rate. Ask the lender to spell out any charges upfront.

Can I switch lenders after locking?

Yes, a lock is not a contract to use that lender, but you would give up the locked rate and start the process over. Weigh the cost and time of switching against any savings.