How mortgage rate locks work — a clear overview
A mortgage rate lock is a short-term agreement between you and your lender that fixes the interest rate and often the discount points for a defined period while the loan is processed. Locks protect borrowers from rising rates between application and closing, but they also create a deadline: if the lock expires before your loan funds, you typically lose that guaranteed rate and must accept whatever rates are available at that later date.
In practice, lenders advertise common lock windows—30, 45, 60, and 90 days—but some lenders offer custom lengths or longer locks for construction or jumbo loans. Most conventional mortgage locks protect the quoted rate for the agreed term without additional cost for standard lengths, though extensions and special features (like float-downs) often carry fees. Consumer-facing guidance from the Consumer Financial Protection Bureau (CFPB) explains the basic protections and what to ask your lender when you get a rate quote (Consumer Financial Protection Bureau).
Typical lock features and industry language
- Lock period: The calendar days the rate is guaranteed (e.g., 30–90 days).
- Lock confirmation: A written or electronic notice from the lender that documents the rate, points, lock period, and any fees.
- Extension fee: A charge to lengthen the lock if closing will occur after the original window.
- Float-down: An optional feature that allows the borrower to switch to a lower rate if market rates fall after the lock, usually for a fee and under specific conditions.
In my 15 years working with mortgage borrowers, I recommend getting a written lock confirmation immediately after you decide to lock. A verbal agreement isn’t enough; the confirmation protects you if the lender later disputes key terms.
When to lock vs. when to float
Lock when:
- You have a firm closing date and the loan is already well into underwriting or appraisal is complete.
- Rates are trending up and you want protection against further increases.
- You’re using rate-sensitive contingency timing for a home purchase.
Float (delay locking) when:
- You are early in the process with uncertainty around closing dates.
- Rates are volatile but trending downward and you can tolerate the risk.
- You expect underwriting/appraisal/seller issues that make closing timing uncertain.
A hybrid approach often makes sense: start by watching rates and set a target (your “lock below” threshold). If rates move above that threshold before a certain date, lock. If your lender offers a float-down option, compare the cost of that feature to the likely value of a rate drop.
How extensions work — when and how to extend a lock
Extensions are common. Typical reasons include appraisal delays, title problems, underwriting questions, seller contingencies, or a longer-than-expected escrow. Options when the lock is about to expire:
- Request an extension from the lender. Most lenders offer one or more extensions for a fee (flat fee or per-day charge) depending on how long you need. Ask for the fee schedule in writing.
- Re-lock at current market rates. If the market moved in your favor, you might re-lock at a lower rate without an extension fee.
- Negotiate a float-down or credit. If you have a float-down in your lock, you may be able to take advantage of a lower rate; otherwise some lenders will offer a one-time courtesy float-down if rates drop.
Extension fees vary widely. Some lenders charge a modest flat fee for a short extension; others price extensions as a percentage of the loan or a per-day fee. For planning, expect anywhere from a few hundred dollars to more for long extensions—get the exact numbers up front.
Deciding whether to extend: a checklist
- How many days will the extension add versus how long the delay will be?
- How much does the extension cost (flat fee or per-day)?
- What are today’s market rates compared with your locked rate?
- Is your loan near final underwriting or still missing major items (income docs, appraisal)?
- Will the seller or another party likely be able to meet the new closing timeline?
- Are there alternatives (relocking, float-down, rate buydown, or closing delay)?
If market rates are higher than your locked rate and the extension fee is less than the expected increase in monthly payment present value, extending the lock is often the right choice. Conversely, if rates have fallen materially, consider re-locking at the new lower rate or asking for a float-down.
Cost examples (simple math)
Example A — Extend vs. relock:
- Loan: $400,000, 30-year fixed
- Locked rate: 6.00% (monthly P&I ≈ $2,398)
- Current market rate at expiration: 6.50% (monthly P&I ≈ $2,528)
- Increase = $130/month = $1,560/year
- Extension fee: $500 for 30 days
If the extension prevents a 0.50% rate rise, paying $500 saves roughly $1,560 in the first year and more thereafter; financially, the extension commonly makes sense.
Example B — Pay to float-down vs. keep original lock:
- If your lock included a float-down option costing $350 and rates drop 0.25% saving $60/month, the float-down pays for itself in about six months.
These simplified examples don’t include taxes, insurance, or the time value of money. Use them to frame the decision; run exact numbers with your lender or financial advisor.
Common lender-side issues that cause delays
- Appraisal scheduling or report delays
- Title defects and clearance
- Underwriter document requests or conditions
- Borrower-supplied incomplete or late documentation
- Seller side delays (payoff demands, repairs, or contract timing)
When these issues arise, move quickly. Often the fastest path to avoid extending a lock is actively resolving the specific condition causing delay (e.g., ordering a new appraisal or providing the tax return the underwriter requested).
Alternatives to frequent extensions
- Ask for a rate lock contingency in the purchase contract (gives buyer a little breathing room, subject to negotiation).
- Negotiate the seller to cover extension fees if seller actions caused the delay (sometimes feasible in competitive offers).
- Use a mortgage broker who shops lenders for longer complimentary lock periods or cheaper extension fees.
- Consider a rate buydown if the market moves sharply between lock and closing; see how buydowns compare to locks in our article on Mortgage Rate Buydowns: Short-Term Relief or Long-Term Cost? (https://finhelp.io/glossary/mortgage-rate-buydowns-short-term-relief-or-long-term-cost/).
Practical tips and lender questions to ask before you lock
- Request written confirmation of the lock: rate, points, lock expiry date, and any fees.
- Ask whether the lock is guaranteed (no rescission) and whether the lender charges for early re-locking or extensions.
- Ask about float-down options and the exact cost or conditions for a free float-down.
- Who pays extension fees if the delay is lender-caused? (Sometimes lenders waive fees for their own processing errors.)
- If you’re using a mortgage broker, ask whether the lock is with the broker’s lender or a wholesale investor—this affects how extensions work.
If you want to better time your lock relative to your loan status, our primer on Mortgage Preapproval: Steps and Benefits explains how earlier preapproval can shorten lock windows and reduce delays (https://finhelp.io/glossary/mortgage-preapproval-steps-and-benefits/).
Regulatory and consumer protection notes
Federal and consumer-protection agencies, including the Consumer Financial Protection Bureau, recommend receiving written rate-lock terms and being informed about any fees and alternatives. For government-backed loan programs or loans sold to investors like Fannie Mae or Freddie Mac, investor guidelines influence lock products and allowable lock lengths; your lender can explain which investor’s rules apply to your loan (Consumer Financial Protection Bureau; Fannie Mae/Freddie Mac investor guidelines).
Common mistakes to avoid
- Relying on a verbal rate lock; always insist on written confirmation.
- Ignoring the calendar: assume closing will take longer than the earliest estimate and plan accordingly.
- Not asking about extension fee caps or whether a lender will cover fees when they cause delays.
- Assuming float-downs are free—many require a fee or strict criteria.
Final checklist before you sleep on a lock
- Get the lock confirmation in writing and save it.
- Confirm the lock expiry date and the extension fee schedule.
- Track the loan’s progress with your lender and respond quickly to underwriting conditions.
- Compare extension costs to the estimated monthly payment increase if you let the lock lapse.
Professional disclaimer
This article is educational and does not constitute personalized financial or legal advice. Specific lock terms, fees, and consumer protections vary by lender and loan program. Consult your mortgage officer, loan servicer, or a qualified financial advisor for decisions tailored to your situation.
Sources and further reading
- Consumer Financial Protection Bureau — mortgage and rate lock guidance (https://www.consumerfinance.gov)
- FinHelp glossary: Understanding Rate Locks and Float-Down Options for Mortgages (https://finhelp.io/glossary/understanding-rate-locks-and-float-down-options-for-mortgages/)
- FinHelp glossary: Mortgage Rate Buydowns: Short-Term Relief or Long-Term Cost? (https://finhelp.io/glossary/mortgage-rate-buydowns-short-term-relief-or-long-term-cost/)
- FinHelp glossary: Mortgage Preapproval: Steps and Benefits (https://finhelp.io/glossary/mortgage-preapproval-steps-and-benefits/)
If you’d like, provide your loan scenario (loan type, estimated close date, locked rate, and lock expiry) and I can walk through the cost/benefit math for extending vs. relocking in a follow-up.
