A rate lock is a lender's commitment to hold a specific interest rate for you for a defined period. Once locked, your rate doesn't change, even if market rates rise before your closing. It's one of the most important decisions in the mortgage process, and the timing affects both what you pay and how flexible your transaction remains.
How Rate Locks Work
When you lock a rate, the lender typically requires a specific property (the purchase contract), a loan amount, and a loan program. The lock is tied to all three. If you change any of them, switch from a 30-year to a 15-year, change the purchase price significantly, or change loan programs, the lock may be voided or repriced.
Lock periods are usually 15, 30, 45, or 60 days. A 30-day lock is the standard for most transactions. Longer lock periods cost more. The lender is taking on more market risk to hold your rate, and they price that risk in.
Locked vs. Floating
Before you lock, your rate floats with the market. If rates drop, you can lock at the lower rate. If rates rise, you haven't yet locked in your exposure. Floating makes sense when you have significant time before closing and believe rates are likely to improve.
Once locked, you're protected from rate increases. If rates drop after you lock, you generally don't benefit from the drop unless your lender offers a float-down option. For a broader look at what drives mortgage rate movements, the underlying factors matter for timing decisions.
When to Lock
For most buyers, the practical answer is to lock when you have a signed purchase contract, you're within 45 days of your expected closing date, and current rates work for your budget. Trying to time the perfect rate is speculation. Nobody, including professional traders, consistently gets it right.
If you're under contract with a closing in 30 to 45 days, locking immediately removes rate risk from an already stressful process. The upside of floating, rates drop slightly, rarely justifies the downside risk of a payment increase. For context on whether to buy now or wait in the current rate environment, that's a separate question from when to lock once you're under contract.
Under contract and watching rates move?
We'll walk you through the lock decision with real numbers, what locking now vs. floating costs in your specific scenario.
Float-Down Options
Some lenders offer float-down provisions that let you capture a rate improvement after locking if rates fall by a certain amount, typically 0.25 to 0.50 percentage points. Float-downs come with a cost, usually 0.125 to 0.25 percent of the loan amount.
Whether a float-down makes sense depends on how much rate movement you expect and what the float-down costs. In stable rate environments, it's often not worth the fee.
Rate Lock Extensions
If your closing is delayed, by an appraisal issue, a title problem, a seller who's slow to move, or any other reason, and your lock expires, you'll need an extension. Extensions typically cost 0.125 to 0.375 percent of the loan amount per 15-day extension.
On a $400,000 loan, a 15-day extension at 0.125 percent costs $500. Two extensions cost $1,000. This adds up. If your closing is at risk of slipping, notify your lender early, extensions requested in advance are often cheaper than emergency extensions.
New Construction and Longer Lock Periods
New construction purchases often need 90 to 180-day locks because the build timeline is uncertain. Extended locks are more expensive, and some builders have preferred lender programs that bundle lock costs into the transaction. Shop this carefully. New construction financing has its own pricing dynamics, and the right way to compare mortgage rates between lenders matters even more when longer locks are involved.
