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Published: Dec 04, 2023 10 min read

It seems like everytime you blink, mortgage rates change. They were below 3% during the pandemic, and now they’re stuck above 7% as a result of the Federal Reserve’s war on inflation. They bounce up and down every day.

Given the six- and possibly even seven-figure price tag of homes these days, your mortgage rate is a crucial figure. Even slight fluctuations could translate into thousands of dollars over the life of your loan.

If you’re nearing the end of your home-buying journey, you may want to ensure your mortgage rate — and thus how much you’ll be paying every month — doesn’t make any sudden last-minute changes.

To help with that, most lenders allow you to lock in your mortgage rate for a specific amount of time. In this guide, we’ll walk you through how the mortgage rate lock works, including example scenarios and pros and cons.

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What is a mortgage rate lock?

In short, a mortgage rate lock — sometimes called mortgage rate protection — is an agreement between you and your mortgage lender to “lock in” the current mortgage rate for a set amount of time during the homebuying (or home refinancing) process. It usually lasts about a month or two. Not all lenders offer rate lock-ins, and some that do charge for it.

An interest rate lock can shield homebuyers from rate fluctuations in volatile housing market conditions, ultimately providing predictability and peace of mind for the homebuyer.

For example, if your mortgage rate is locked in at 7% for 60 days, that’s the interest rate you’ll pay on the mortgage even if rates jump to, say, 7.5% before the loan closes. Unfortunately, the opposite is also true. Let’s say mortgage rates drop to 6.5% within that 60-day window. You’ll be stuck with 7%.

To avoid the latter scenario, some lenders allow what’s called a “float down” agreement — typically for a fee. A “float down” will let you change your locked-in rate to a lower rate if that’s the way the markets blow during your lock-in period. Lenders can stipulate certain percentage-point requirements to trigger the float down agreement, such as a 0.5- or 1-percentage point change.

So if the mortgage rate change is under that amount, you’ll end up with the initial “locked in” rate.

When to lock in your mortgage rate

When determining whether to lock in a mortgage rate, timing is key.

Technically, you can lock in the mortgage rate at any time after you’ve been approved for the home loan and up to five days before closing.

According to the Consumer Financial Protection Bureau (CFPB), mortgage rate locks are most commonly offered for 30, 45 and 60 days. A longer rate lock may cost you more money, as would an extension. Specifics vary from lender to lender.

As for ideal timing, you would want to lock in the mortgage rate at its lowest point while also giving yourself enough time to close on the home. In reality, mortgage rates can be unpredictable and not even mortgage professionals on Wall Street know for a fact how rates will change day to day. Don’t go overboard trying to find the perfect day to lock in your rate.

The important parts are to have a rate that works for your budget with a lock-in period long enough so that it would not require an extension (or an additional fee).

Since you’re already late in the homebuying process — the usual 30 to 60 day window should be plenty of time to close on the loan, but there are always exceptions. Something could pop up during the home inspection or appraisal, for example, that would kick start negotiations and eat up time before the home purchase or refinance is complete.

Similarly, if your personal finances have changed since you’ve submitted your loan application (e.g. your credit score or income notably changes or you decide to adjust your down payment amount) your mortgage lender may need to restart the underwriting process and re-issue your loan estimate. Delays could also result from switching your loan term or loan type, such as going from a 30-year fixed rate mortgage to a 15-year adjustable rate mortgage.

These hiccups or delays could result in a new rate than the one based on your initial mortgage application — even if that rate was locked in.

How to lock in a mortgage rate

Depending on your mortgage lender, your mortgage rate lock may or may not be automatic. If you’ve already been approved for the loan, check your loan estimate for mentions of a rate lock and the time period of the lock.

If you haven’t yet received your loan estimate — or your loan estimate doesn’t mention a rate lock, you’ll want to get in touch with your loan officer. The best mortgage lenders offer free rate locks and will work with you if you need a rate lock extension.

To fully understand your options and to avoid any last minute surprises, the CFPB recommends asking pointed questions about mortgage locks upfront.

Here are some example questions you can ask:

  • “What’s the rate-lock time frame on my loan estimate?”
  • “If closing takes longer than the rate-lock period, what are my options?”
  • “If the rate-lock currently offered costs money, is there a shorter or cheaper option available?”
  • “What happens if mortgage interest rates go down after I lock my rate in?

While your loan estimate is a starting point and will tell you whether your rate is locked, “it will not provide you with information about how much it would cost to extend the rate lock, how much you are paying for the specific rate lock time frame, or whether you could pay more or less for a different time frame,” the CFPB says. “You should ask about those details.”

If your initial loan estimate didn’t include the rate lock, your lender will have to send you another one. You should carefully check it to make sure other details, such as your closing costs, haven’t changed.

Why some homebuyers like mortgage rate locks

The homebuying process can be a slog. The last thing homebuyers want is to find out — late in the process — that their monthly mortgage payments are going up because market rates jumped right before your closing date.

In a best case scenario, mortgage rate locks help you avoid those higher rates, providing predictability and stability to your budget.

For example, in 2022, mortgage rates were especially volatile. At the beginning of August 2022, mortgage rates dipped below 5%, according to the St. Louis Fed. By the end of September, rates jumped to 6.7%.

For a $250,000 loan with a 30-year fixed rate, such a rate fluctuation would equate to a $270 higher monthly payment. A rate lock-in would have helped borrowers during that time avoid the sudden hikes.

Potential downsides of locking in your mortgage rate

Mortgage rate locks don’t always end up being such a saving grace. There are instances where a mortgage rate lock could backfire.

To contrast the best-case scenario above, mortgage rates could, of course, go down. If your rate is locked in, you could miss out on lower payments. While a float down option helps mitigate the sting, the agreement could cost you money. Mortgage lenders — if they offer float downs to begin with — may bake a float-down fee into the interest rate you’re given, possibly charging you 0.25% to 1% of your loan amount.

A worst-case scenario could be that you end up paying upwards of 1% of your mortgage for a float down agreement, and then mortgage rates do edge down slightly but not enough to trigger your float down rate. (Remember: lenders may dictate that the rate has to change by a specific figure for the float down to take effect).

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Mortgage rate lock in: FAQs

Do all lenders offer rate locks?

Most, but not all, mortgage lenders offer mortgage rate locks. Some may do this automatically with your initial loan approval, and some may do so by request. Policies can vary widely, and they may not be free. See your loan estimate to see whether the rate you were approved for is locked in, and ask your mortgage loan officer additional questions about the lender’s lock-in policies.

How long can you lock in a mortgage rate?

Mortgage rate lock-in policies often range from 30 to 60 days, though some lenders have shorter or longer options available, or no lock-in option at all. For a lock-in beyond 60 days, it’s likely you will have to pay a rate lock fee.

Should I lock in a mortgage rate?

Locking in your mortgage rate could be a good option if you're worried about interest rates climbing higher. If you’re locking your rate in, be sure to ask how long the lock will last and about any potential fees.

If the rate goes down, can you unlock it?

If mortgage rates drop after you locked one in, you may be able to “unlock” it with a float down agreement. Under this type of agreement — which typically costs extra and has limits on the size of the rate change — you may be able to get the lower interest rate.

How early can you lock in a mortgage rate?

You can lock in your interest rate as soon as you’ve been approved for the mortgage, though you may not always want to do so immediately. Closing on the home could take several weeks, and you want to be sure that you have ample time to complete the homebuying process before your lock-in policy’s expiration date.

Summary of Money’s mortgage rate lock-in guide

As the name suggests, a mortgage rate lock-in allows you to secure the interest rate that you’ve initially been approved for while the rest of the homebuying process plays out. Lock-in policies vary from lender to lender. Your mortgage lender may charge you to lock in your rate, extend the length of your lock-in period or add a “float down” clause to protect yourself in the event that market rates go down. With extensions and float-down protections, mortgage rate lock-ins can get quite expensive. However, if the fees are low and mortgage rates are climbing, a lock-in could end up saving you thousands of dollars.

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