Rate Locks: How They Work and When to Lock

What is a rate lock?

A rate lock is a guarantee from the lender that your interest rate will not change between now and closing — even if market rates go up. Typical locks last 30, 45, or 60 days.

How locks work

• You choose a rate and lock it with the lender.
• The rate stays fixed for the lock period, regardless of market movement.
• If rates rise, you win. If rates drop, you lose (unless you have a float-down option).
• Longer locks cost more. A 60-day lock might add 0.125–0.25% to your rate vs. a 30-day lock.

When to lock

• Lock immediately if rates are trending up or you are within 30 days of closing.
• Float if rates are stable or dropping and you are more than 45 days out.
• Split the difference: some brokers offer a "float down" option — you lock now, but if rates drop before closing, you can relock at the lower rate (usually for a fee of 0.5–1% of the loan).

When NOT to lock

• You are more than 60 days from closing — most locks expire, and paying for long locks is expensive.
• You are still rate shopping — locking locks you into that lender.
• Your financial situation is in flux (recent credit change, job change incoming) — wait until everything is stable.

What if rates drop after you lock?

Option 1: Float-down clause — your lock agreement lets you drop to the current rate, typically for a $500–$1,500 fee or a 0.125% rate increase.

Option 2: Walk away — you can switch lenders if rates have dropped significantly. You will lose any application fees paid, but if the savings are big enough, it is worth it.

Option 3: Grin and bear it — if rates only dropped 0.125% and you would spend more in fees to change, keep your lock.

Pro tip

Ask your broker: "Can I lock today and monitor rates for a free float-down?" Some brokers offer this as a service — you lock at a reasonable rate, and they track the market and float you down automatically if conditions improve.