Quick overview
A mortgage rate lock (often called simply a “rate lock”) temporarily guarantees the interest rate and sometimes the discount points quoted by the lender while your loan is processed. Locks are practical tools for reducing the interest-rate risk between the moment you get a loan commitment and when you actually close. The guarantee covers quoting errors and market movement during the lock window, but it does not replace the need for underwriting, appraisal, or other closing conditions.
Why rate locks matter now
Volatility in short‑term bond yields and central bank policy can move mortgage rates quickly. A small move in the rate can change monthly payments and total interest paid by thousands of dollars over a 15‑ or 30‑year loan. Using a rate lock shifts the market‑movement risk from you (the borrower) to the lender for the length of the lock period. The Consumer Financial Protection Bureau explains the basics and encourages borrowers to get a written confirmation of any lock terms (CFPB: https://www.consumerfinance.gov/ask-cfpb/what-is-a-rate-lock-and-should-i-lock-in-my-mortgage-interest-rate-en-249/).
How a rate lock actually works
- You receive a written rate quote from the lender that includes the interest rate, any discount points, and the lock expiration date.
- You (or the lender) accept the lock and the lender records the agreement. Written confirmation—an email or rate lock confirmation—is essential.
- If market rates rise during the lock window, your locked rate applies at closing. If rates fall, you keep the locked rate unless you have an option that allows a change.
- If your lock expires before closing, the lender can re‑price the loan at the current rate, which may be higher or lower.
Many lenders offer lock lengths from 15 days up to 180 days or more. Common options are 30, 45, 60, 90, and 120 days. Longer locks typically cost more or require higher rates because the lender takes on more market risk.
Types of locks and common provisions
- Standard rate lock: fixes the rate and points for the lock period. No downside protection if the rate drops unless you negotiated otherwise.
- Rate lock with float‑down: allows one or more rate reductions if market rates fall below your locked rate. Float‑down features typically have restrictions (timing windows, fee or only if rates fall by a set number of basis points).
- Conditional locks or verbal holds: short, informal commitments while paperwork is prepared. Always insist on written confirmation—verbal holds are not protective.
- Extended locks: 120 days or longer; often used for construction loans, delayed closings, or when a borrower expects underwriting delays.
The terms and availability of float‑downs, extensions, and cancellations vary by lender. The Mortgage Bankers Association and major agency lenders publish guidance, but your written lock confirmation is the controlling document (MBA: https://www.mba.org/).
Costs you should expect
- No‑cost locks: Some lenders advertise “no-cost” locks where the quoted rate includes the lock fee. These generally mean other fees or a slightly higher rate or points.
- Paid locks: Some lenders charge a separate lock fee or require purchase of rate protection. Fees vary with lock length and loan size.
- Extension fees: If closing is delayed past your lock expiration, expect a fee or an update to the current rate. Extension costs increase with the length of the extension.
- Float‑down fees: If your lock includes a float‑down option, there may be an up‑front premium or a charge at the time you exercise the float‑down.
Always ask the lender for a breakdown of how the lock affects your rate, points, and closing costs. CFPB stresses getting any rate lock in writing and confirming whether the lock is transferable if the loan sells to another investor.
When to lock: timing and strategy
- Lock when you have a fully underwritten approval or when you need price certainty for closing timelines (e.g., contingent offers on a home purchase).
- If rates are rising or volatile and you expect to close within the next 30–60 days, locking early is typically prudent.
- If rates are trending sharply downward, a float‑down provision can provide a compromise: you lock now to avoid a spike, but keep limited access to a better rate if the market improves.
- For long, complex transactions (new construction, delayed sales), choose an extended lock but budget for a higher cost.
In my practice, I typically recommend clients lock once they have a clear closing date and a signed purchase contract. This prevents surprises if the market moves during underwriting.
Key documents and confirmation items to request
- Rate‑lock confirmation or Rate Lock Agreement (shows locked rate, points, expiration date, and fees).
- Disclosures showing whether the lock is refundable or transferable.
- An explanation of the float‑down rules, if any (how many basis points must rates move, windows when you can exercise the option).
If the lender won’t provide these items in writing, get a second opinion and consider a different lender.
Real-world examples (illustrative)
- Example 1: Buyer locks a 30‑year fixed rate at 3.75% for 45 days. Before closing, market rates jump to 4.25%. The buyer closes at 3.75% and avoids higher payments.
- Example 2: Refinance with a float‑down option. The borrower locks at 4.00% with a one‑time float‑down if rates fall by 25 basis points. Rates drop to 3.75% before closing; the borrower pays the float‑down fee and receives the lower rate.
These examples show why knowing the float‑down mechanics—timing, fees, and eligibility—is critical before accepting a lock.
Common mistakes and how to avoid them
- Relying on verbal locks. Always get written confirmation. Verbal promises are not enforceable.
- Forgetting lock expiration. Note the date prominently and confirm with your lender two weeks before expiration.
- Assuming float‑downs are free. Most float‑downs have costs or restrictions—get the exact terms.
- Not planning for delays. If your closing could slip, budget for an extended lock or ask for a contingency in the contract.
Who benefits most
- Homebuyers in competitive markets who need certainty to close on purchase contracts.
- Refinancers who want to protect a quoted savings estimate.
- Borrowers who expect closing within the lock window but face a volatile rate environment.
If you’re exploring refinancing options, see our page on Mortgage Refinancing for additional planning steps. For insights on how property-related costs tie into your monthly payment and closings, our guide to Escrow Account for Mortgages is helpful. For broader mortgage terms and planning, review our general Mortgage glossary entry.
Negotiating and shopping for the best lock
- Compare lock terms across lenders, not just the interest rate. Ask about float‑down rules, extension fees, and what happens if closing is delayed.
- Consider locking with a lender who offers transparent, written rate‑lock agreements and a history of timely closings.
- Ask if the lock price is good only for the borrower or if it’s contingent on the loan reaching a particular investor (some investor overlays can void a lock).
Short FAQ
- How long should I lock? Choose a lock that matches your expected underwriting and closing timeline plus a buffer—common practice is 30–60 days for purchase loans.
- Can a lender change my rate after a lock? Only if the lock expires or the borrower makes changes that affect pricing. Otherwise, a valid, written lock keeps your rate.
- What if my lock expires? Expect a repriced rate or an extension fee; act quickly to negotiate an extension.
Bottom line
A mortgage rate lock is one of the simplest, most effective tools borrowers have to manage interest‑rate risk during loan processing. It provides price certainty and reduces the chance that market moves will change your monthly payment between offer and closing. Treat a rate lock as a legal and financial instrument: get it in writing, understand the float‑down and extension rules, and match the lock length to your realistic closing timeline.
Sources and further reading
- Consumer Financial Protection Bureau, “What is a rate lock and should I lock in my mortgage interest rate?” https://www.consumerfinance.gov/ask-cfpb/what-is-a-rate-lock-and-should-i-lock-in-my-mortgage-interest-rate-en-249/
- Mortgage Bankers Association (industry guidance): https://www.mba.org/
- Freddie Mac, Mortgages learning center: https://www.freddiemac.com/learn/mortgage/interest-rate-lock
Professional disclaimer
This content is educational and reflects typical practices as of 2025. It is not personalized financial, legal, or tax advice. Terms and availability of rate locks differ by lender and loan program; consult your lender or a qualified mortgage professional for decisions tied to your situation.