What is a mortgage rate lock?

Learn how mortgage rate locks work

Interest rates for mortgages can fluctuate daily. Locking your mortgage rate can guarantee the interest rate you are offered for a limited period of time when you apply for a mortgage.

What is a mortgage rate lock?

A mortgage rate lock can keep your interest rate the same from the beginning to the end of your loan approval process. Interest rates are usually locked in for a predetermined period such as 30 or 60 days. If you receive a mortgage rate offer you like, locking the rate can guarantee you will receive that rate if your loan closes prior to the expiration of that period and there is no change in your financial condition or loan parameters.

If you decide against locking your interest rate, the interest rate offered to you may change based on market conditions.

The interest rate lock will be subject to certain terms and conditions set forth in the Rate Lock Agreement. These terms specify that the rate lock is based on certain loan parameters and that any changes in those loan parameters or your financial condition may result in a change in the interest rate offered.

When can you lock in a mortgage rate? Is there a best time to lock in a mortgage rate?

Many borrowers lock in their mortgage interest rate when they first accept a loan offer from a lender. Locking in your interest rate typically contains a certain level of risk. Since mortgage rates can change daily, there is a chance rates will rise or drop after you lock in your rate. There is no way to predict which way the market will trend. It is a good idea to ask your lender how long you are able to wait to lock in your rate.

What do I do if my mortgage rate lock expires before closing?

Some lenders allow you to extend your rate lock, but this can come with an additional fee. When you initially lock your rate, don’t be afraid to ask questions about what the lender’s rate lock period is, their policy, and your available options. It’s a good idea to confirm that the length of your rate lock period extends through your scheduled closing date. You can help your lender speed up this process by responding quickly to requests for information and documentation.

Is there a mortgage rate lock fee?

Some lenders may charge a fee or a percentage of the loan amount as a rate lock fee. If you lock in a lower rate, you may be able to recoup the cost of the mortgage rate lock over the life of the loan. Mortgage rate lock extensions may also come with a fee if your loan needs more time to process.

Last reviewed and updated June 2023 by Freedom Mortgage Corporation.