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What is a mortgage rate lock?

Gina Pogol
The Mortgage Reports editor

In this article:

A mortgage rate lock is a mortgage lender’s commitment to honor an exact interest rate for a specific period of time.

  • In general, the longer your rate lock period, the higher your mortgage rate
  • While your rate lock is in progress, take care to close your loan on time. Your lender is not obligated to honor your rate after the lock expires
  • Rate locks are loan specific, meaning if you switch from an FHA loan to a conventional loan, your rate could change (and will need to be relocked)

Get your rate lock agreement in writing, and understand your lender’s policies regarding when you can lock if fees are charged, and what happens if a lock expires.

Verify your new rate (Nov 19th, 2018)

What is a mortgage rate lock?

A mortgage rate lock is a mortgage lender’s commitment to providing a certain interest rate for a specific period of time. It should also indicate the lender fees, such as origination charges and discount points, needed to secure that interest rate.

Mortgage rate locks are expressed in days. The two most common rate lock periods, though, are 30 days and 60 days.

In general, the longer your rate lock period, the higher your mortgage rate. This schedule is just an approximate example; all lenders have their own pricing schedules and they change constantly as interest rates do.

  • 7-day rate lock: Equal to 30-day mortgage rate – 25 basis points (0.250 percent)
  • 15-day rate lock: Equal to 30-day mortgage rate – 12.5 basis points (0.125 percent)
  • 30-day rate lock: The most commonly-quoted rate, with no added fees or discounts
  • 45-day rate lock: Equal to 30-day mortgage rate + 12.5 basis points (0.125 percent)
  • 60-day rate lock: Equal to 30-day mortgage rate + 25 basis points (0.25 percent)

Rates locks are available for periods longer than 60 days, but upfront fees typically apply. There are even rate locks available for periods of one year or longer, used for new construction housing.

Locking may seem like a good deal because you remove a lot of mortgage rate uncertainty. However, very long-term locks can prohibit your ability to shop for the best rate.

Use caution when locking for long periods of time.

Related: When should I lock my mortgage rate?

For shorter-term rate locks, the amount of time in a rate lock should be equal at least to the number of days required to close your purchase or refinance loan.

This is because, during the period of your rate lock, your mortgage lender must honor your agreed-upon mortgage rate and costs.

Float-downs, re-locks and extensions

If you can’t decide to lock or float your mortgage rate, there is another option — the float-down. In fact, some lenders offer free float-downs to their clients.

A float-down allows you to lock in your rate, but if the rate for your program is lower when it’s time to close, you get the lower rate. there are rules about when you can lock in your lower rate, and how much lower it has to be (often .25 percent) before the float-down provision kicks in.

Float-downs come with fees, usually, and the fees are due upfront.

Related: Can I “unlock” my mortgage if interest rates drop?

Relocks are different. If you have a 30-day rate lock but worry that your loan may take longer to close, check your lender’s current rates for your program. If they have not dropped, you may be able to relock the same loan at the same rate. And your 30-day clock restarts from the day you relock your loan.

Extensions are additions to your existing lock. If your loan is going to close late (“blow the lock”), there are several possible repercussions. If rates are the same or have fallen, your lender will probably extend your lock for free.

However, if mortgage rates are higher, things get complicated. Many lenders will extend a day or two for free, especially if the delay in closing was caused by them. Others will require you to make a choice — either pay a re-lock / extension fee, which may be about .25 percent, or relock your loan at the new, higher rate. Run the numbers and see which costs you less.

5 things to know about mortgage rate locks

There are five things to remember about mortgage rate locks.

  1. Get your rate lock agreement in writing. Don’t rely on notes from a phone conversation
  2. Rate lock agreement is mortgage loan specific. If you switch from an FHA loan to the HomeReady mortgage, you need to complete a new lock
  3. Know your lender’s rate lock policies. Most require at the minimum a property address. You can’t lock while still shopping for a home
  4. Know whether your lender charges a rate-lock fee if you pay it up front, and if you get it back at closing
  5. Know your lender’s policy in the event of a blown lock — who pays if the lender causes the late closing?

Furthermore, know that lenders can’t usually execute mortgage rate locks after-hours or overnight.

Therefore, if you plan to lock your mortgage rate in the evening, you may get the next day’s mortgage pricing, which may be better or worse.

What are today’s mortgage rates?

Every mortgage borrower needs a rate lock in order to close. Therefore, when you’re buying a home or refinancing one, make sure you get the best rate lock possible.

Get today’s live mortgage rates now. You don’t have to provide your social security number, and all quotes come with access to your live mortgage credit scores.

Verify your new rate (Nov 19th, 2018)