Mortgage Rate Locks

Because interest rates can change daily, borrowers often want certainty that the rate they were quoted will still be available when their loan closes. This is where a rate lock comes in. This lesson explains how rate locks generally work.

What a rate lock is

Without a lock, the interest rate on your loan could continue to move with the market right up until closing, which introduces uncertainty into your monthly payment calculations.

How long locks typically last

Rate lock periods vary by lender and are often chosen to align with the expected time needed to complete the loan process and close on the home, commonly ranging from a few weeks to a couple of months, though exact options depend on the lender and the specific transaction.

What happens if a lock expires

Discussing realistic closing timelines with your lender and real estate agent, and building in some buffer time, can help reduce the chance of a lock expiring unexpectedly.

Float-down options

Some lenders offer an optional feature called a float-down, which allows the borrower to take advantage of a lower rate if market rates drop after locking, under certain conditions defined by the lender. This feature is not universal and may come with its own cost or eligibility rules, so it is worth asking whether it is available and what it would cost.

Costs associated with locking

Depending on the lender and the length of the lock period requested, there may or may not be a direct cost to locking a rate, though longer lock periods are sometimes associated with a slightly higher rate or an added fee, reflecting the greater risk the lender takes on by guaranteeing the rate for a longer window. Asking about these tradeoffs upfront helps avoid surprises.

A common mistake

Understanding how rate locks work, including their duration, potential costs, and what happens if they expire, helps you approach this part of the loan process with realistic expectations and better questions for your lender.