Mortgage Rate Locks: When to Lock and When to Float

Quick overview

A mortgage rate lock is a contractual promise from your lender that the interest rate and quoted points on your mortgage will not change for a defined window (typically 30, 45, 60 or 90 days). That window covers the period from rate lock to closing. Deciding whether to lock or float is a tradeoff between certainty and the opportunity to capture a lower rate if the market moves in your favor.

This article explains how locks work, what to watch for, practical decision rules, and how to work with lenders to minimize cost and risk. The guidance below draws on industry best practices and official consumer resources (Consumer Financial Protection Bureau) and agency guidance (Freddie Mac, Federal Reserve).

(Consumer Financial Protection Bureau: https://www.consumerfinance.gov/; Freddie Mac: https://www.freddiemac.com/; Federal Reserve: https://www.federalreserve.gov/.)

How mortgage rate locks work

• Offer and acceptance: After your lender issues a loan estimate and you, the borrower, and the property seller have an accepted contract, you can instruct the lender to lock the rate. Some borrowers lock earlier—especially if they have a signed purchase contract and significant dates on the calendar.
• Lock terms: The lock specifies rate, points, and lock expiration date. If the loan doesn’t close before expiration, you must either extend the lock (usually for a fee), re-lock at current market rates, or float.
• Float-downs and exceptions: Some lenders offer a “float-down” option that lets you lock and then take a lower rate if market rates fall by a pre-defined amount; float-downs cost extra and have conditions. Ask whether the float-down requires requalification, appraisal updates, or additional fees.

Authoritative guidance from federal consumer agencies recommends that borrowers get written descriptions of lock terms and fees (Consumer Financial Protection Bureau). Always request this information in writing.

When should you lock a mortgage rate?

Lock when you favor certainty over a small chance of saving money, or when external deadlines make a delayed closing costly. Specific triggers to lock include:

• Closing timeline is firm: If you have a hard closing date (moving, lease end, school start), locking reduces the risk of a late-rate surprise.
• Market signals point to downside risk: Clear, imminent central bank action or strong inflation readings that tend to push mortgage rates higher are reasons to lock. (See Federal Reserve communications and market moves.)
• You are risk-averse or rate movement would materially affect affordability: If a one-point rise in rate changes whether you can afford the home or affects qualifying debt‑to‑income ratios, prefer locking.
• The lender’s lock fee and terms are reasonable: If the cost of a longer lock or extension is high relative to your potential exposure, locking is sensible.
• You already paid for rate buy-down points: If you’ve purchased lender points to lower your rate, locking protects that investment.

In my practice, I often advise clients to lock when they have only a short window to closing. Certainty around monthly payment and qualification generally outweighs the speculative benefit of floating for a few weeks.

When might floating be a good choice?

Floating (not locking) can be appropriate when:

• Closing is flexible and you can tolerate some movement in rate and monthly payment.
• Market indicators suggest rates could decline—e.g., easing economic data, dovish central bank guidance, or declining Treasury yields. But remember markets are noisy and forward-looking.
• The lender’s lock fees or extension costs are expensive, making the expected value of a lock unattractive.
• Your budget has a cushion and you can re-run underwriting if the rate changes slightly.

Floating can produce savings if rates fall, but it also exposes you to increases that can tighten affordability. In one case I worked on, a client chose to float and saved two basis points—valuable for them because they had no hard closing date—but this is the exception rather than the rule.

Key factors to evaluate before deciding

1. Timeline and contingencies: How long until appraisal, inspection, title work, and closing? If any of those items could slip and force a lock extension, factor the extension fee into your decision.
2. Lock length options and costs: Lenders commonly publish 30-, 45-, 60-, and 90-day locks. Longer locks may carry higher fees or higher rates; ask for a written explanation.
3. Float-down terms: If offered, read the float‑down fine print—some require a one‑time fee and a minimum rate movement before it applies.
4. Loan type and program rules: Some government programs (FHA, VA) and investor overlays have specific timelines for underwriting that effectively shorten or lengthen the practical lock window.
5. Rate sensitivity: Calculate how a rate change affects monthly payment and qualification—for example, estimate how much higher a payment would be if rates rose by 0.25% or 0.50%.
6. Market context: Follow primary market signals—10‑year Treasury yields, large-rate move days, and Fed announcements—but treat short-term headlines cautiously. The Federal Reserve’s policy path influences mortgage pricing indirectly via Treasury yields.

Costs, fees and contract mechanics to watch

• Lock fees: Some lenders charge an upfront lock fee or bake it into a higher rate for longer locks. Others include a short free lock and only charge if you extend.
• Extension fees: If closing is delayed past your lock expiration, expect an extension fee or a new rate quote.
• Float‑down fees: These let you benefit from a lower rate but cost extra and can have restrictive triggers.
• Re‑lock implications: If your lock expires and market rates are higher, you’ll have to re‑lock at the current market rate unless you negotiate otherwise.

Ask your lender to provide a written summary of all possible fees before you decide. CFPB guidance encourages borrowers to get clear written terms about lock and float policies.

Practical strategies and examples

• Staged locking: If you have multiple interest-rate-sensitive milestones (e.g., appraisal then closing), discuss staged locks with your lender—locking the initial rate for the longest predictable period and securing a short extension for last-mile tasks.
• Short lock with float-down option: If a lender offers a float‑down at reasonable cost, a 30–45 day lock with float‑down may balance certainty with upside protection.
• Coordinate with the seller and agent: Ask for contract contingencies that allow reasonable extension windows if appraisal or underwriting takes longer—this reduces the chance of paying extension fees.

Case study A — Conservative buyer: A buyer with a tight budget and a fixed close date locks early to eliminate execution risk. In practice, that buyer traded a small potential savings chance for the certainty of staying within budget.

Case study B — Flexible buyer: A buyer with flexible closing and a high tolerance for volatility chose to float and monitored the market daily. They saved money when rates eased, but this outcome required constant attention and the ability to adjust expectations.

Checklist before you lock

• Get the lock terms in writing (rate, points, lock expiration, fees).
• Confirm whether your lock includes a float‑down and exactly how it works.
• Ask about extension fees and the lender’s average lock‑to‑close time.
• Recalculate affordability at a higher rate scenario to ensure you still qualify.
• Coordinate the lock date with your real estate agent and title company to minimize unexpected delays.

Common questions

Q: Can I change lenders after locking my rate?
A: Yes, but switching lenders typically means losing the lock and starting the process anew with a new rate quote. If you’re considering a switch, compare the cost of re‑locking and any lost credits.

Q: What if the market drops after I lock?
A: Unless you purchased a float‑down or the lender has a special program, you generally cannot claim the lower rate after locking. Float‑down options are the exception.

Q: Is the lock binding on the lender?
A: A written rate lock agreement is enforceable per the terms. If your lender tries to change the lock without cause, escalate it in writing and consult your loan officer or a consumer protection resource.

Links and further reading

• For guidance on closing costs and how they interact with rate decisions, see our article on Mortgage Closing Costs: Common Fees and How to Save.
• To evaluate whether paying points makes sense when you lock, review When to Pay Points on a Mortgage: Cost‑Benefit Considerations.
• If you’re exploring assumable financing as a hedge in a rising-rate environment, read What to Know About Assumable Mortgages in a Rising Rate Market.

Final professional tips

• Ask your lender for historical lock‑to‑close averages so you can choose a lock length aligned with their performance.
• Avoid emotional decisions based on headlines; treat locking as part of a structured closing plan.
• If you’re uncertain, favor a short lock with a float‑down if available — it offers a compromise between protection and potential upside.

Professional disclaimer: This content is educational only and does not constitute personalized financial, legal, or tax advice. If you have specific needs, consult a licensed mortgage professional or financial advisor.

Author: Senior Financial Content Editor & Mortgage Advisor (FinHelp.io). Content current as of 2025 and informed by consumer resources including the Consumer Financial Protection Bureau and public mortgage market data.