When you are approved for a mortgage, the interest rate you see is not guaranteed until it is locked. A mortgage rate lock is an agreement between you and your lender that holds your interest rate steady for a set period while your loan is processed. Understanding how a mortgage rate lock works can help you avoid surprises between application and closing.
The short answer: a rate lock freezes your interest rate and some of your loan terms for a specific period, usually from application until closing. If rates rise before you close, your locked rate stays the same. If rates fall, your locked rate may not — unless your lock has a float-down option. Read our guide on how long mortgage approval takes to plan your timeline.
What a rate lock actually does
A rate lock sets the interest rate on your loan so it does not change during the lock period, even if market rates move. Without a lock, the rate you are quoted at application could be different by the time you close.
A rate lock typically locks:
- The interest rate
- The loan type (for example, fixed or adjustable)
- The loan term
- Sometimes the points or lender credits on the loan
The lock is tied to a specific loan amount, property and closing date. If any of those change, the lock may need to be revised.
Lock periods
Rate locks come in different lengths, called lock periods. Common lock periods include:
- 30 days
- 45 days
- 60 days
- 90 days
Shorter lock periods usually cost less, but they give you less time to close. If your loan does not close before the lock expires, you may need an extension, which can cost money. Longer lock periods cost more but give you more cushion for delays.
Choose a lock period that comfortably covers your expected timeline from application to closing, with a little room for surprises.
What happens if rates change
A rate lock protects you if rates rise before you close — your locked rate stays the same. But if rates fall after you lock, your locked rate generally does not drop automatically.
Some lenders offer a "float-down" option, which lets you take a lower rate if rates fall during the lock period. Float-downs often have rules, such as a one-time option or a minimum rate decrease, and they may cost extra. Ask your lender whether a float-down is available and how it works.
Lock expiration and extensions
If your loan does not close before the lock expires, you have a few possible outcomes:
- Extension: your lender may extend the lock, often for a fee.
- Re-lock: you may be able to lock a new rate at current market rates.
- Worse rate: if rates have risen, you may end up with a higher rate.
This is why choosing a lock period with a little cushion matters. Delays in appraisal, underwriting or title work can push your closing date, and a too-short lock can cost you.
Questions to ask your lender about a rate lock
- What lock periods are available, and what does each cost?
- Is a float-down option available if rates fall?
- What happens if my closing is delayed and the lock expires?
- How much does an extension cost?
- What can invalidate the lock (for example, a change to the loan amount or property)?
- Will I get the lock terms in writing?
How to decide when to lock
There is no single best time to lock. Some buyers lock as soon as they are under contract for peace of mind; others watch rates and lock closer to closing. Your loan officer can explain current market conditions and help you decide, but the decision is ultimately yours.
A good rule: if you would be uncomfortable with a higher rate, locking earlier may reduce stress. If you are comfortable with some risk and rates are trending down, you might wait — but understand that rates can rise quickly.
Frequently asked questions
Is a rate lock the same as being approved? No. A rate lock holds your interest rate for a period. Approval is the lender's decision that you qualify for the loan. You can be approved without a lock, and you can lock before final approval.
Can I lock a rate before I find a home? Some lenders offer extended lock programs for new construction or buyers who are still shopping. Ask your loan officer whether an extended lock is available.
Does a rate lock cost money? Some locks are included in your loan; others cost a fee, especially longer lock periods. Ask your lender for the cost of each lock period.
What if rates drop after I lock? Your locked rate usually stays the same. Some lenders offer a float-down option for a fee. Ask whether this is available before you lock.
Ready to lock your rate?
When you are ready, get a free quote or get pre-approved with Alex.
You can also call Alex Al-Ammar at (313) 992-9898 or email Alex@vestalending.com.
This article is for general information only. It is not legal, tax or financial advice. Rate lock terms, costs and availability vary by lender and loan. Speak with a qualified professional about your individual situation.
