What is a Mortgage Rate Lock?

A mortgage rate lock is a mortgage lender’s commitment to honor a quoted mortgage through closing to a home buyer.

A Longer Definition: Mortgage Rate Lock

A mortgage rate lock is a price agreement between a mortgage lender and a home buyers with three parts: a mortgage rate, a cost, and a time frame.

1. The mortgage rate is the interest rate for the buyer’s mortgage
2. The cost is how many discount points the buyer will pay at closing
3. The time frame is for how many days the agreement is valid

When a home buyer asks for a rate lock, it’s their commitment to their mortgage lender and their approval to proceed with mortgage underwriting. The rate lock guarantees their mortgage terms for a specified number of days, barring material changes in the application related to credit score, employment, and address.

Until a mortgage is rate-locked, its interest rate is subject to change. Once it’s locked, the rate lock is honored, regardless of the current market or today’s mortgage rates.

Home buyers can request mortgage rate locks in 15-day increments.

The typical quoted rates, like the ones shown on the Homebuyer.com mortgage rates page, assume 30-day mortgage rate locks. Longer locks raise rates.

Here is how the number of days in a mortgage rate lock can affect cost. This chart is based on sample mortgage pricing from Homebuyer.com.

The Cost of Mortgage Rate Lock Lengths

Rate Lock Length	What It Costs
15-day	Standard rate with 5 basis points credit
30-day	Standard rate
45-day	Standard rate with 7 basis points cost
60-day	Standard rate with 13 basis point cost
90-day	25 basis points above standard rate

Home buyers can also choose mortgage rate locks longer than 90 days.

When choosing a rate lock length, choose a time window to get you through your closing date. Although mortgage rate locks can be extended for a fee, the option is sometimes cost-prohibitive.

Mortgage Rate Lock: A Real-World Example

First-Time Home Buyer Stories: Mortgage Rate Lock

Imagine a first-time home buyer who gets their offer for a home accepted. Their buyer’s agent smartly negotiates for a closing date in 30 days, allowing the buyer to get a 30-day mortgage rate lock from the lender.

In the ensuing weeks, the market for mortgage-backed securities deteriorates, which causes a sudden and sharp increase in U.S. mortgage rates. Because the buyer is already locked in, though, they are shielded from the change.

At their closing, the buyer feels lucky for getting a rate below the current market rates and for having a 30-day rate lock, which is cheaper than a 45-day lock. Their timing and strategy worked out great.

Common Questions About Mortgage Rate Lock

What happens if mortgage rates drop after I lock in my rate?

If interest rates fall after an interest rate has been locked in with a lender, buyers typically can’t take advantage of lower rates unless their rate lock agreement includes a “float-down” option, which usually come with additional costs.

Can I extend a mortgage rate lock if my home purchase is delayed?

Yes, many lenders offer the option to extend a rate lock, but there may be an additional fee for this service. It’s important to discuss extension policies with your lender in advance.

Is there a fee for locking in a mortgage rate?

Some lenders charge a fee for a rate lock, while others offer it for free. The fee, if applicable, varies based on the length of the lock period.

How long can I lock in a mortgage rate?

The typical lock period ranges up to 60 days, but longer periods are available. Keep in mind that longer locks can be more expensive.

Does a rate lock guarantee my mortgage application will be approved?

No, a rate lock only fixes the interest rate. The approval of your mortgage application still depends on factors like credit score, income verification, and the property appraisal.

What are the risks of not locking my mortgage rate?

Without a mortgage rate lock, home buyers are exposed to interest rate increases before closing. Higher rates can lead to higher monthly payments and cause your mortgage to get turned down.

How does a lender determine the locked-in rate?

The locked-in rate is typically based on current market rates at the time of the lock, along with elements of your mortgage application such as your credit score, loan amount, and down payment.

Can a mortgage rate lock be cancelled?

Yes, a mortgage rate lock can generally be canceled. However, this may involve fees, especially if you switch lenders after locking in a rate. Additionally, canceling a rate lock means you’re subject to current market rates, which could be higher.

If I lock in a rate with one lender, can I switch to another lender?

You can switch lenders after locking in a rate, but you’ll lose the locked-in rate with the initial lender. Starting with a new lender means you’ll be subject to their rates and terms, which could be different from your original agreement.