How do mortgage rate locks work, and why do they matter?

Mortgage rate locks are a short-term contract between you and a lender that fixes the interest rate for a specified window while your mortgage moves through underwriting to closing. The core purpose is simple: protect your monthly payment from market swings between the time you agree to a loan and the day it funds. In my 15 years helping borrowers, timely locks have prevented last-minute rate shock and kept budgets predictable—especially in volatile markets.

Key components of a rate lock

  • Lock period: Most lenders offer 30-, 45-, 60-, or 90-day locks. Some will extend to 120 days or more for complex transactions or construction loans, often for an additional fee.
  • Locked rate vs. float: “Locked” means your rate won’t rise during the lock window. “Floating” or “shopping the market” means you accept the risk of rising rates but could benefit if rates fall.
  • Float-down option: An add-on that lets you switch to a lower rate if market rates fall before closing. Float-downs are not universal and usually carry a fee or stricter timing rules.
  • Written confirmation: The lock should be documented with an expiration date and the rate terms. Ask for a lock confirmation or rate-lock commitment in writing—this is the borrower’s protection if there’s a dispute.

(For consumer-focused guidance on rate locks and lender disclosures, see the Consumer Financial Protection Bureau (CFPB).)

Why timing matters

Lock length ties to your transaction timeline. A typical purchase closing scheduled in 30–45 days can comfortably use a 30–45 day lock. If you expect appraisal delays, title issues, or complex underwriting (self-employed borrowers, jumbo loans, new construction), plan for a longer lock or a lender that offers flexible extension policies. In my practice, I ask clients about potential closing risks before choosing a lock length to avoid costly last-minute extensions.

Costs and common pricing structures

  • No-cost locks: Many lenders advertise free locks for standard terms (30 days). “No-cost” usually means the lock itself has no explicit fee, but other tradeoffs can exist (e.g., fewer float-down options).
  • Paid locks and extension fees: Longer locks and extensions typically incur a fee. Fees can be a flat amount or expressed as a small percentage of the loan amount. Lenders also sometimes charge daily extension fees if your closing slips.
  • Float-down charges: If available, float-downs may cost a one-time fee or require you to have paid for a premium lock product.

Avoid assuming all “free” locks are identical—compare the full terms, including whether a float-down is allowed and how extension charges are calculated.

Common scenarios and real-dollar thinking

Scenario A — Rising market: You lock at 3.75% for 45 days. A week later, rates spike to 4.5%. Because you locked, your rate stays at 3.75% and your monthly principal-and-interest payment is lower—possibly saving you hundreds per month depending on loan size and term.

Scenario B — Falling market without float-down: You lock at 4.0% for 60 days. Rates drop to 3.25% before closing but you didn’t buy a float-down. You keep your 4.0% lock and miss the lower market rate.

Scenario C — Delayed closing: You lock for 30 days but closing is pushed due to an inspection or title issue. Your lender charges an extension fee or requires you to re-lock at the current market rate if you don’t pay to extend.

Estimate potential savings or costs before locking: a half-percent change on a $300,000 30-year loan changes your monthly payment by roughly $88–$90. Small rate moves compound over 30 years, so a lock decision can have big long-term effects.

How to choose a lock strategy (practical checklist)

  1. Map your closing timeline. If you have a solid, short-closure plan, a shorter lock is usually cheaper.
  2. Ask the lender to put the lock terms in writing: rate, points, lock expiration, and any fees for extension or float-downs.
  3. Compare lenders on more than headline rate: ask about lock fees, float-down availability, and how they handle underwriting or appraisal delays.
  4. Consider a float-down when rates are volatile and the cost is reasonable relative to potential savings.
  5. If you’re refinancing, coordinate the payoff of the old loan and the closing date so the lock window covers expected processing time (see our guide on when to refinance).

Document and disclosure notes

Lenders should disclose the rate lock terms and the lock expiration date. You will receive a Loan Estimate early in the process that outlines the projected terms; ask the lender how and when they will confirm a lock. The CFPB emphasizes that borrowers should receive clear information about their mortgage terms and protections—always keep written confirmations in your loan file (Consumer Financial Protection Bureau).

Float-downs, points, and rate buys

  • Points (also called discount points) lower your interest rate in exchange for an upfront fee. Points can be purchased whether you lock or float, but if you buy points, confirm whether the lock rate already reflects them.
  • A float-down option is different from buying points. It gives you a chance to move to a lower rate if market rates fall, sometimes with restrictions (only available once, or only if rates drop a certain amount).

If you’re comparing locking strategies during a refinance, our article on how mortgage points affect long-term refinance calculations explains how to weigh up-front point costs versus monthly payment savings.

Shopping multiple lenders without hurting your credit

If you shop multiple lenders within a short time window, credit bureaus typically count multiple mortgage rate shop inquiries as a single inquiry for scoring purposes. Still, coordinate your timing and clarify each lender’s lock policies—some lenders will lock only after underwriting or after you sign a lock agreement.

What happens if a lock expires?

If a lock expires because closing was delayed and you don’t pay for an extension, the lender will typically re-price your loan at current market rates. That could mean a higher rate, a requirement to buy points, or additional fees. Some lenders offer “free” extensions in lender-caused delays, but the policy varies—get this in writing if it matters to your transaction.

Mistakes to avoid

  • Assuming every lock is free or identical. Read the fine print.
  • Forgetting the lock expiration date. Add it to your calendar and ask for reminders.
  • Not getting the lock in writing. Verbal promises are weak when rates move.
  • Over-locking for convenience. Paying for a long lock when your closing is certain can be an unnecessary cost.

Quick FAQs

  • Can sellers or real estate contingencies affect the lock? Yes. If your sale or contingencies delay closing, you could need to extend the lock.
  • Are rate locks available on all loan types? Most conventional, FHA, VA, and USDA loans offer locks, but the terms and fees vary by lender.
  • Do rate locks guarantee the loan will close? No. Locks protect only the rate; approval still depends on underwriting requirements, appraisal, and title.

Final professional advice

In my practice I prioritize transparent written lock terms and align the lock length with the realistic closing timeline. When rates are trending up and closing is weeks away, a timely lock can provide meaningful savings and peace of mind. When rates are falling, consider a float-down only after checking the cost and conditions.

This article is educational and not individualized financial advice. For decisions that affect your home financing, consult a licensed mortgage professional or housing counselor.

Sources: Consumer Financial Protection Bureau (cfpb.gov); Freddie Mac (freddiemac.com); Federal Housing Finance Agency guidance and lender disclosures as of 2025.