Mortgage Rate Lock Explained: How to Protect Your Interest Rate
A rate lock is your lender's commitment to honor a specific interest rate for a set period, typically 15–60 days. Locking protects you from rate increases while your loan processes.
What You'll Learn
- What a rate lock is and how it works
- Typical lock periods (15, 30, 45, 60 days)
- What happens if your rate lock expires
- Float-down options
- When to lock: at application vs. closer to closing
The Full Explanation
Understanding rate locks helps borrowers time their lock decision wisely. CTC Processing helps ensure files close before rate lock expiration — a lock extension costs money and is avoidable with proactive processing.
Frequently Asked Questions
When should I lock my rate?
If you believe rates are rising, lock immediately. If you believe rates may fall, some lenders offer 'float down' options. Most borrowers lock at application or when going under contract for a purchase.
What happens if my loan doesn't close before my rate lock expires?
The lock expires and you must extend or re-lock at current market rates. Lock extensions typically cost 0.125%–0.375% per week. CTC tracks lock expiration on every file and alerts the LO if a file is at risk.
Can I change lenders after locking?
Yes, but you lose your locked rate at the previous lender. New lender = new lock at current market rate. CTC helps ensure files close at the original lender before lock expiration.