Rate locks explained: when to lock, what it costs, what can change

What is a mortgage rate lock?

A rate lock is a commitment from the lender to hold a specific rate and price for your loan for a set number of days. If rates go up during that time, your rate stays the same. If rates go down, your rate usually stays the same too.

The lock covers the loan as it was described when you locked: the loan type, amount, property, your credit score and your down payment or equity. After you lock, you'll get an updated Loan Estimate that shows the locked rate and when the lock ends.

When should you lock your mortgage rate?

On a purchase, you can usually lock once you have a signed contract on a home and have applied for the loan. Before then, there's no specific property to lock for. On a refinance, you can usually lock any time after you apply.

Whether to lock right away or wait is a bet on the market. Waiting, called floating, can pay off if rates drop, and cost you if they rise. No one can predict short-term moves reliably. If the payment works for you at today's rate, locking removes the worry. Why live rates aren't your rate explains why rates change daily.

How long does a rate lock last?

Common lock periods run from about 30 to 60 days, and longer ones are available. The right length is however long it will realistically take to close, with a little room to spare.

On a purchase, that usually means locking through your contract's closing date. On a refinance, ask your Mortgage Advisor how long loans like yours are taking to close.

Does it cost money to lock a rate?

Usually not as a separate fee, but the lock length is built into the cost of the loan. Longer locks carry more risk for the lender, so a longer lock usually means a slightly higher rate or more points for the same loan.

That's why it's worth choosing the length carefully. Locking for far longer than you need costs money, and locking too short can mean paying for an extension.

What happens if your rate lock expires?

If your loan won't close before the lock ends, you'll need an extension or a new lock. Extensions usually cost a fee or a small increase in the cost of the loan for each extra day or week.

If the lock expires without an extension, the loan is usually locked again at whichever is worse for you: your original terms or the current market. Getting documents in quickly is the best way to avoid needing more time.

What can change after you lock?

Market moves can't change a locked rate, but changes to the loan can. If the appraisal comes in lower than expected, your down payment or equity changes as a share of the value. If your credit score drops, your loan amount changes, or you switch loan programs or property type, the lender recalculates the loan with the new details.

Those changes can raise or lower the rate or the cost. Your lender will send an updated Loan Estimate when they do. Keep your finances steady while you're locked, for the same reasons you would after a pre-approval.

What is a float-down?

A float-down lets you take a lower rate if the market improves after you lock. Not every lender offers one, and those that do often charge for it or require the market to drop by a set amount first. Ask whether one is available before you lock, not after.

Quick answers

When should I lock my mortgage rate?

On a purchase, usually once you have a signed contract and have applied. On a refinance, any time after you apply. Lock when the payment works for you.

How long does a mortgage rate lock last?

Commonly about 30 to 60 days. Choose a length that gives you time to close with a little room to spare.

Can my rate change after I lock?

Not because of the market. It can change if your loan changes, such as a lower appraisal, a different loan amount or a lower credit score.

What happens if my rate lock expires before closing?

You'll need an extension, which usually has a cost, or a new lock, which is often at the worse of your old terms or the current market.