Learn / Rate Lock Explained

Rate Lock Explained

A rate lock freezes your interest rate for a set period while your loan is processed, protecting you if rates rise before closing.

How a lock works

Once you lock, the lender guarantees your rate for a window, often 30 to 60 days, as long as you close in time and your loan details do not change.

Lock vs float

Locking protects you from rising rates but means you do not benefit if rates fall. Floating leaves your rate open to the market until you lock. The right choice depends on your risk tolerance and where rates seem headed.

If your lock expires

If closing is delayed past the lock period, you may need a lock extension, which can cost a fee, or you may have to accept current market rates. Ask your loan officer about extension costs before you lock.

What a lock costs and how length changes pricing

A lock is priced into the rate. Longer locks carry more risk for the lender, so they cost more. The pattern is consistent even though the exact amounts move with the market.

The cost usually shows up as a small addition to the rate or as points rather than a separate fee. Ask for the same loan quoted at two different lock lengths to see the spread on your file.

Float-down provisions

A float-down lets you take a lower rate once if the market improves after you lock. Terms vary widely. Common conditions include a minimum improvement threshold before it can be used, a single use per loan, a deadline some days before closing, and a fee. Not every lender offers one, and it is not automatic. If rate direction is a real concern on your file, ask whether a float-down exists, what triggers it, and what it costs, before you lock rather than after.

Extensions and re-locks

When a lock expires before closing, there are generally two paths. An extension continues the original terms for a set number of days and is normally charged as a fraction of a point, often billed per day or per week. A re-lock puts you at current market pricing, which can be better or worse than what you had. Many lenders apply worst-case pricing on a re-lock, meaning you get the higher of the old rate or the new one.

Expirations usually come from the same handful of causes: appraisal delays, missing income or asset documents, title problems, and repair negotiations. The lock clock does not pause while those get resolved, which is why files that close on time are usually files where documents went in early.

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Frequently asked questions

What is a rate lock?

A guarantee that freezes your interest rate for a set period while your loan closes.

How long does a rate lock last?

Commonly 30 to 60 days, sometimes longer for a fee.

Can I lower my rate after locking?

Usually not, unless the lender offers a float-down option. Ask before you lock.

How much does a longer rate lock cost?

Longer locks price higher because the lender carries more risk. The cost normally appears inside the rate or as points rather than a separate line item. Ask for your loan quoted at two lock lengths to see the difference on your file.

What is a float-down and do I get one automatically?

A float-down lets you capture a lower rate once after locking if the market improves. It is not automatic, not offered by every lender, and usually carries conditions such as a minimum improvement, a deadline, and a fee.

What happens if my rate lock expires before closing?

You either extend, which continues the original terms for a fee, or re-lock at current pricing. Many lenders apply worst-case pricing on a re-lock, so you receive the higher of the old rate or the new market rate.