When Should You Lock A Mortgage Rate? Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: On This Page
LindaJohnsonbaugh/Getty Images July 21, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Zach Wichter is a former mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation for The Points Guy. Bankrate senior editor for mortgages Bill McGuire has been writing and editing for more than four decades at major newspapers, magazines and websites. Jeffrey L. Beal, president of Real Estate Solutions, has 40 years' experience in multiple phases of the real estate industry. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. When it comes to , every little bit counts. A quarter of a percentage point doesn’t sound like much, but it can mean thousands of extra dollars in interest paid, or not paid, over the life of a typical 30-year loan. In times of rising rates, borrowers should pay extra attention to their rate quote, and take advantage of a rate lock. What is a mortgage rate lock
A freezes the interest rate on a mortgage, usually for a fee paid when you agree to the terms of the loan. The mortgage lender guarantees (with a few exceptions) that the rate offered to a borrower will remain available to that borrower for a stated period. With a lock, the borrower doesn’t have to worry if rates go up between the time they submit an offer and close on the home. How does a mortgage rate lock work
A lock protects you from the frequently cycling nature of interest rates. Even if rates increase, you’ll retain your previously quoted, lower rate when you close on your new loan. That said, if interest rates go down after you lock your rate, you’ll miss the opportunity for a lower rate. The exception to this is if you have a “float down” option with your rate lock, which does allow you to nab a lower rate if rates fall.
What is a float-down mortgage rate lock
Some mortgage lenders offer a with a float-down provision. This means that if rates fall within a specific period after your loan is approved, you get the lower rate. If rates go up, you get the rate you were quoted. There’s a cost to this feature, so consider your options carefully. Rates might not move at all or in your favor, and the float-down means you’ll have to pay a higher interest rate for the life of the loan or shell out money for you’ll never see again.
How long can you lock in a mortgage rate
Rate locks typically last from 30 days to 60 days, though they sometimes last 120 days or more. Some lenders do offer a free rate lock for a specified period. After that, however, even those generous lenders might charge fees for extending the lock.
When should you lock in a mortgage rate
Borrowers typically can’t lock in a rate until after the initial loan approval — and they worry that by locking in too early, they might miss the opportunity for a better rate before they complete a purchase, or that they might get stuck paying extra to extend the lock once it expires. A longer rate lock is more expensive. For example, a borrower who chooses a 30-day lock on a fixed-rate 30-year loan might pay a 4 percent rate and zero points, while a 60-day lock might cost 1 point (equal to 1 percent of the loan) or a slightly higher rate with a half-point. However, when mortgage rates are rising, you might consider locking the lower rate as soon as possible. It’s a gamble, because no one really knows what are going to do — they’re set that can change from day to day. It might be helpful to look at rates from the past 60 days to get a sense of how they fluctuate. How to lock in a mortgage rate
Most mortgage lenders offer you the option to lock in your mortgage rate after your loan application has been . You’ll want to implement the lock before the mortgage goes through the underwriting process. Call or contact your mortgage lender and ask them about a rate lock. They will likely want you to provide a time frame for the lock, but will often allow you to lock your rate for a period. They will provide additional details to you, including any fees associated with this process. Mortgage rate lock fees
A rate lock can help you save significantly on your mortgage, but you’ll incur some costs along the way. There are two main types of rate-lock fees: the initial rate lock fee and the rate lock extension fee. You might have to pay the initial lock rate fee upfront, or you might be able to roll it into your loan. If you need to extend the lock, lenders usually charge an additional fee, typically a percentage of the loan amount.
Should you lock your mortgage rate
Determining whether you should lock your mortgage rate depends on several factors. Consider the current mortgage rate in your area, as well as your financial situation including your credit score. Also consider the current economic climate and the risk that rates may rise or fall in the near term. If you believe that your current rate is competitive with others in the area and is at a rate that you can afford, it is worth locking into your mortgage rate. It provides additional certainty and peace of mind in an otherwise sometimes volatile market.
Questions to ask your lender before you lock
Be sure to get a clear explanation of your lender’s rate lock rules. If you lock in a rate too soon and end up going with a different type of loan, your rate lock might be void. Borrowers also can lose a rate lock if their circumstances change — such as a shift in their credit score or in their — before settlement. The underwriting process could uncover factors you weren’t aware of or knew were important, so if possible, ask your lender what conditions would void the lock before you commit to it: Does the locked rate change in certain circumstances? Will the rate lock be in effect long enough to cover the entire homebuying process? How to make sure you re financially prepared for a mortgage
Before you lock in a rate, make sure your budget is in order and you are financially prepared to apply for a mortgage, including having the cash to cover the rate-lock fee, if there is one. Ask yourself: Is my good enough to get preapproved? Do I know how much I want to ? Have I looked for ? Bottom line
Mortgage rates fluctuate constantly, and a rate lock can spare you that uncertainty — for a fee. Generally, if interest rates are relatively low, it’s best to secure a rate lock so you can retain it when your new loan closes. SHARE: Zach Wichter is a former mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation for The Points Guy. Bankrate senior editor for mortgages Bill McGuire has been writing and editing for more than four decades at major newspapers, magazines and websites. Jeffrey L. Beal, president of Real Estate Solutions, has 40 years' experience in multiple phases of the real estate industry. Related Articles