Mortgage Rate Lock: What Is It, and Should You Lock Your Rate Today?

A mortgage rate lock is basically your lender saying, “This is your interest rate, and we’ll hold it for you for a while.” Most locks last 30 to 120 days, and if you close before it expires, your rate won’t budge, even if rates jump in the meantime.

So… should you lock today? It depends on your timeline, your budget comfort level, and whether you’d be annoyed (or relieved) if rates move after you go under contract. Let’s walk through how rate locks work, what they cost, and an easy way to decide.

Table of Contents

1. What is a mortgage rate lock?
2. Benefits
3. Risks
4. Should I lock my rate today?

What is a mortgage rate lock, and how does it work?

A rate lock freezes the interest rate on your mortgage when you buy a home. If you lock your rate, it won’t change as long as you close within a specific time frame. 

Here are the basics to know about locking rates:

• How long does a rate lock last? A typical mortgage rate lock period is 30, 45, or 60 days, but some lenders may give you more time. 
• How much does a rate lock cost? Some lenders charge a mortgage rate lock fee, which is usually a percentage (e.g., 0.25% to 0.50%) of the loan amount.
• What happens if you don’t close on time? If you don’t close on schedule, the rate lock expires unless your lender offers an extension. That may cost you another fee.

Rate locks aren’t a 100% guarantee that you’ll get the rate you want. A mortgage rate lock could be voided if:

• Your down payment or loan type changes.
• The appraisal comes in higher or lower than anticipated.
• Your credit score drops after you apply for a loan.
• The lender can’t verify your income. 

Rate locks are fairly straightforward, but they sometimes cause confusion for homebuyers. For example, Reddit turns up multiple threads from buyers asking the same question: when do you lock in a mortgage rate?

The decision to lock rates ultimately hinges on what’s happening with mortgage rates and how you feel about it. This Redditor sums up what to consider about locking rates:

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Mortgage rate lock benefits

A mortgage rate lock offers two main benefits: a set rate and peace of mind. Knowing your interest rate makes it easier to plan your budget once it’s time to start paying the mortgage. You might consider a mortgage rate lock if you:

• Are concerned interest rates might rise before you close. 
• Feel satisfied with the rate you have and don’t want to try to gamble for a lower one. 
• Work with a lender that offers a float down option. 

A mortgage rate lock float down protects you if mortgage rates fall before you close. If rates dip below what you were quoted during the underwriting period, the lender reduces your rate.

A rate lock with a float down option is typically best when you’re not sure which way rates will move. As you shop for lenders, ask about this option. SoFi, for example, offers a Look and Lock program to help you get the lowest rate possible on your mortgage.

Is there a best day to lock in a mortgage rate? No, because rates are unpredictable. Some Redditors say you shouldn’t take chances and to lock in early.

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Others pulled the trigger right away, only to regret it later.

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byu/Shoddy_Race_6777 from discussion
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The best day of the week to lock in a mortgage rate is the day you feel most compelled to do so. In other words, do your research about rate trends, but ultimately, trust your gut.

Mortgage rate lock risks

Mortgage rate locks can offer reassurance, but they aren’t right for every buyer. You might consider passing on a rate lock option if:

• There’s a possibility that mortgage rates will go down before you close, and your lender doesn’t offer a float down option. 
• The fee to lock your rate is more than you’re comfortable paying, or you’d need to pay a sizable fee to extend the rate lock.
• You anticipate snags, either with the home or with your mortgage application, that could delay closing past the rate lock period. 

Estimating how much you could gain (or lose) can help you decide whether a rate lock is right for you. 

Let’s say you want to get a $350,000 mortgage. At last glance, the average rate for a 30-year loan was 6.19%:

Here’s what the loan could cost you if rates go up to 6.50%, with and without a rate lock. 

In this scenario, we assume a mortgage rate lock fee of 0.25%. These calculations don’t consider any additional amounts you pay to escrow for property taxes and insurance, or for private mortgage insurance. Still, you can see that locking your rate saves you $20,711, even with an $875 rate lock fee.

Should I lock my rate today?

There’s no perfect timing for when to lock in a mortgage rate; no one can predict exactly which way rates will go. If you’re unsure, this checklist can help you decide. 

• Check rate trends. Which way are mortgage rates moving? Is the Federal Reserve discussing a rate hike or cut? Federal Reserve decisions don’t affect mortgage rates directly, but they can influence them indirectly.
• Closing. How quickly do you anticipate closing? The longer the time frame, the more urgency there may be to lock rates. 
• Fees. Will you pay a fee to lock your mortgage rate? And if you don’t close on time, will you have to pay another fee to extend the rate?
• Float down. Does the lender offer a float down option? If so, that could be worth it, even if you have to pay a fee, to make sure you get the lowest mortgage rate possible. 

Of course, take your time to shop around and compare loan options. Consider getting multiple rate quotes from different lenders, or getting a mortgage preapproval letter to see what you might qualify for. Learn more about the best mortgage lenders to find the loan that’s right for you.