Should I lock a mortgage rate today?

You should lock a mortgage rate when three conditions are met:

1. If buying a house, you have a signed home purchase agreement
2. You’re approved for the mortgage loan you need
3. You’ve compared lenders to find the lowest rate available

Most borrowers shouldn’t try to time the market when locking an interest rate. Even experts often don’t know whether rates will move up or down from one day to the next.

The most important thing is to compare loan options and find the lowest rate for . Then, it’s time to lock.

In this article (Skip to…)

• What is a rate lock?
• When can I lock a rate?
• When I lock a rate?
• Risks of waiting to lock
• How long does a rate lock last?
• What if rates fall after I lock?
• Today’s rates

“Borrowers are allowed to lock their interest rate any time after they have completed a mortgage loan application,” says Matt Hackett, operations manager for Equity Now.

“As soon as the lender has your complete application and credit report, they often have enough information to be able to lock in at any later point in the process, up until about 10 days prior to closing,” says Melissa Cohn, executive mortgage banker for William Raveis Mortgage.

Borrowers are allowed to lock their interest rate any time after they have completed a mortgage loan application.

“However,” cautions Hackett, “every lender has its own internal guidelines governing the rate lock process.”

You should consult closely with your lender about time frames and the expected closing date to make sure your rate lock doesn’t expire before the loan closes.

The timing to lock a rate looks different depending on whether you’re buying a house or refinancing, per Mike Jones, National Sales Manager of Union Home Mortgage.

• Home buyers should lock a mortgage rate when they have identified a property they’re ready to purchase and are approved for a mortgage loan
• Homeowners looking to refinance should lock a mortgage rate when they’ve found a new loan with the best terms, conditions, and rate for their financial goals

Mortgage rate forecasts might also influence your decision.

Good candidates for a rate lock are those who think rates will go up — or don’t want to take the risk that rates will go up — by the time they close, says Hackett.

But the most important thing is finding your lowest rate before you lock.

Often, shopping among lenders could save you as much as timing your lock for a day when rates are down.

“While most borrowers would think to lock in their rate early for fear of rising rates, it may not be the ideal strategy,” explains Rocky Foroutan, CEO of LenderHomePage.

“Most lenders provide free 30- to 45-day lock-in periods. But if the underwriting process takes longer than expected, or your closing date gets pushed back, your free lock-in period will likely expire and you’ll need an extension.”

“If you opt for an extension,” Foroutan continues, “that’s when the lender may either charge you a fee or slightly raise your interest rate.”

“Typically, a mortgage rate lock will last at least 30 days. This allows time for the sale of the house to go through,” notes Jeff Zhou, CEO of Fig Loans.

But there are options to extend the lock for longer periods — up to 12 months for certain loan types — at an additional cost.

“Often, if mortgage interest rates are the same as your locked rate at the expiration of your lock, you can extend it for free. But some lenders charge a fee to extend no matter what the interest rate is when the lock expires,” says Cohn.

You might be charged for a rate lock extension in the form of a separate fee a slightly higher interest rate.

The further out you push the rate lock deadline, the more expensive it can be.

“This is because the lender has to hedge this interest rate exposure, and hedging with an extended rate lock is generally riskier and costlier to the lender,” Hackett points out.

In other words, charging more upfront via a loan lock fee reduces the risk that your lender will earn less on your loan if rates go higher by the time you close.

It’s not uncommon for rates to drop after you lock. You do have a few options in this case.

First, you can keep your locked rate. It may not be worth trying to renegotiate your lock over a small rate reduction.

However, if rates drop dramatically during that period, you might be able to take advantage of new, lower rates with one of the following strategies.

• Using a “float down”
• Locking with a different lender

Many lenders allow you to “float down,” which lowers your rate to match the market rate if interest rates decrease during your rate lock period.

Usually, the lender charges a fee or higher interest rate if you opt for a float down.

“Most lenders offer a float down provision because ultimately they want to keep you as a customer more than they want to lock you in at a higher interest rate,” notes Zhou.

However, some lenders don’t provide a float-down option.

“If this is true, you can always abandon that lender’s loan application and rate lock and reapply with a different lender offering a lower interest rate,” Cohn suggests.

Remember, you’re not committed to a lender until the loan closes — even you’ve locked a rate. You can always walk away before closing day and find a lender offering a better deal. The downside is, you’ll have to re-apply and go through underwriting all over again, thus extending your time to close.

Alternatively, you could stick with the higher rate you locked in and proceed to closing as planned.

“Or, you could try negotiating with your lender for a lower rate, which they may or may not offer,” says Hackett.

Verify your new rate (May 27th, 2021)