You’ve found the house, your offer has been accepted, and now you’re watching interest rates move every morning. Lock your rate too early, and you might miss a drop. Float too long, and you might get hit with a rise. The right call depends on your budget, closing timeline, and how much risk you can tolerate.
Below, we break down how a mortgage rate lock works, when to lock your rate, how long your lock should last, what it costs, and when leaving your rate unlocked might make sense.
What is a mortgage rate lock?
A mortgage rate lock is a lender’s agreement to hold your interest rate for a set period, as long as the loan details don’t materially change and you close before the lock expires.
Common lock periods are 30, 45, or 60 days, though some lenders also offer shorter or longer options. Choosing to extend a lock can add meaningful cost.
If you’re buying a home and shopping for a mortgage, the rate a lender quotes you today isn’t necessarily the rate you’ll get at closing. Therefore, deciding whether and when to lock your rate can have an impact on your total cost.
What a mortgage rate lock does (and doesn’t do)
Until you lock, your mortgage interest rate can change every day between the rate quote and closing. A rate lock stops that clock. Your lender holds the rate they quoted to you, so a spike in the market after you lock won’t affect your loan.
However, locking your rate is not foolproof if your borrower qualifications change. If your appraisal comes in low, your credit score drops, or the lender can’t verify your income, your rate and terms can still change.
Mortgage lenders base your initial rate offer on factors such as your credit score, loan-to-value ratio, occupancy, property type, loan amount, documentation, or the loan program itself. Therefore, while a lock protects you from market swings, problems with your file can still impact your rate. Plan to keep your finances steady until you close.
When to lock your rate
For a home purchase, many borrowers lock once they’re under contract and their lender has a closing date in sight. Before then, you don’t know how long you’ll need the lock to last, and that number usually drives the decision.
Lock timing isn’t one-size-fits-all. Some lenders allow earlier locks, and refinances can work differently, so ask your lender when you’re eligible to lock and what happens to the lock if your plans change.
If you’re still house hunting, a quoted rate is just an estimate. It can still change until you lock it.
How long should your mortgage lock be?
Say your lender offers 30-, 45-, and 60-day locks. Try to match the lock to your expected closing date, then leave room for possible delays.
Buying a home usually means waiting several weeks for the loan to close, with the average time to close a purchase loan landing around 43 days. A 30-day lock might leave little cushion if you lock early in the process and closing takes longer than expected.
A longer lock buys more breathing room but may cost more, depending on the lender.
Ultimately, a lock that’s too short risks expiring before closing, while a lock that’s too long can mean paying more than you need for protection you won’t use. Work with your team of professionals to try to get the timing right for your situation.
How much a mortgage rate lock costs
Mortgage rate lock costs vary depending on the lender, the lock length, and the loan details. Some lenders charge a separate rate-lock fee, while others build the cost into the loan’s pricing. The only way to know your cost is to ask for each lock option in writing.
Watch for add-ons like a float-down option, which may let you take a lower rate if the market drops during your mortgage lock period. This feature typically costs extra, and your lender may require rates to drop by a certain amount or limit when you can use it. Ask about the fee and conditions before adding it to your rate lock.
Rate lock extensions give you more time to close but typically come with an additional fee. The cost varies by lender and often depends on your loan amount and how many extra days you need. Ask about an extension before your lock expires, since you’re not guaranteed to get the same rate back afterward.
Ask each lender for its lock policy and fee schedule, including extension costs. Then compare those terms along with the quoted rates across lenders.
Lock vs. float: How to decide the best path
Deciding between a rate lock and a float comes down to your risk tolerance and financial situation. If your budget has little room for a higher monthly payment, locking is usually the more conservative choice. Locking may also make sense if your closing date is firm or you’re already close to your approval ceiling.
Floating may make more sense if you have breathing room in your budget and a long runway to closing. If rates dip, floating can pay off, but no lender or economist can promise that.
A float-down option is a middle path. With that option, you can lock your rate and may still qualify for a lower one if the market drops. If your lender offers a float-down, ask what it costs and what conditions apply, since terms vary.
Borrowers already near a lender’s debt-to-income limit may have more reason to lock their rate, since even a modest rate increase can affect qualification.
What happens if your lock expires before closing
There are a few reasons why closing delays might happen. A slow appraisal, a missing document, or a seller who needs more time can push you past your lock’s expiration date.
If your lock expires, the lender may extend it for a fee or reprice the loan based on current market conditions and its relock policy. That could leave you with a higher or lower rate than the one you locked.
Don’t wait until the lock is days from expiring to find out what the lender’s policy is regarding extensions. Get the lock policy in writing from your lender, so you know these details ahead of time.
The takeaway
Get lock quotes and policies from at least three lenders so you can compare total cost and flexibility, not just the rate. For a home purchase, many borrowers lock once they have a contract and a closing date, then choose a lock period that leaves room for possible delays. Floating may make more sense only if a higher rate wouldn’t break your budget or put your approval at risk.
Check page one of your Loan Estimate to see whether your rate is locked and for how long, since some lenders don’t lock a rate when they issue one. The document won’t show what an extension would cost or what you’re paying for your lock period, so ask your lender for those details directly.
Ask about lock fees, extension costs, and float-down options before you lock your rate, since these terms vary by lender.
Frequently asked questions
Can I switch lenders after I lock my rate?
You can usually switch lenders after a rate lock, but that typically means starting over with a new lock at current market rates. You may also lose any lock fee you already paid, and a new lender will need time to process your loan, which can put your closing date at risk. Ask your current lender about its policy before you decide to switch lenders.
Do I have to lock my mortgage rate?
No, you do not have to lock a mortgage rate. Locking is optional, and you can float your rate while your loan is processing if you’re comfortable with the risk of it rising. Floating tends to suit borrowers with room in their budget and a long timeline. Locking tends to suit borrowers who prefer payment certainty.
What happens if rates drop after I lock?
With a standard lock, you generally keep the rate you locked, even if the market improves. That’s the tradeoff for the protection a lock provides. If you want the chance to benefit from a drop, ask your lender whether it offers a float-down option and what it costs. Some lenders may also let you relock under specific conditions, so confirm their policy.
What is the mortgage rate lock-in effect?
The mortgage rate lock-in effect refers to homeowners staying in their homes longer because they don’t want to give up the low mortgage interest rate on their existing loan.