Mortgage Rate Lock: What It Is, How to Secure


A mortgage rate lock is a vital agreement that allows borrowers to secure their mortgage’s interest rate, protecting them from market rate fluctuations during the home buying process. While it offers stability, borrowers should be aware of potential pitfalls, such as limited flexibility and the risk of missing out on lower rates. Let’s delve deeper into what a mortgage rate lock entails, its pros and cons, and key considerations.

What is a mortgage rate lock?

A mortgage rate lock is a crucial agreement between a borrower and a lender that enables the borrower to fix the interest rate on their mortgage for a specified period at the current market rate. This agreement is a valuable tool that provides protection against the volatility of interest rates during the home buying process. Here’s a closer look at the essential aspects of a mortgage rate lock.

How does a mortgage rate lock work?

When a borrower locks in an interest rate on a mortgage, it creates a binding commitment for both the borrower and the lender. This locked rate remains in effect from the time the loan is offered until its closing. During this period, the interest rate remains consistent, shielding the borrower from any market rate fluctuations. However, certain conditions can potentially alter the locked rate:

  • New or corrected information on the borrower’s income or credit score.
  • Changes in the loan amount.
  • Modifications to the type of mortgage being sought.
  • Differences in the home’s appraisal value.

If any of these conditions change, it could affect the interest rate, emphasizing the importance of maintaining consistency throughout the application process.

Rate lock period

A rate lock period typically spans between 30 to 60 days, ensuring that the lender has ample time to process the borrower’s loan application. The duration of the lock period can vary, with some locks extending beyond the standard 60 days. Borrowers can often negotiate the terms of the lock and potentially extend it for a fee or at a slightly higher interest rate.

Float-down provision

In cases where market rates decline during the lock period, borrowers may have the option to capitalize on a float-down provision, allowing them to secure a new, lower interest rate. It’s important to note that this feature comes at an additional cost to the borrower and increases interest-rate risk for the lender.


Here is a list of the benefits and drawbacks to consider.

  • Stability: A mortgage rate lock provides stability by guaranteeing the current interest rate.
  • Protection: Borrowers are safeguarded from rising interest rates during the home buying process.
  • Flexibility: Some rate locks offer a float-down provision, allowing borrowers to benefit from lower rates.
  • Missed opportunities: Rate locks may prevent borrowers from taking advantage of lower rates if they become available during the lock period.
  • Limited flexibility: Once locked, borrowers have limited flexibility to change terms or rates.
  • Extra costs: Using a float-down provision can result in additional costs for borrowers.

Frequently asked questions

What is the purpose of a mortgage rate lock?

A mortgage rate lock serves the purpose of providing stability to borrowers during the home buying process. It guarantees that the interest rate remains unchanged, protecting them from potential rate increases.

Can I change my interest rate after locking?

Once you’ve locked in your interest rate, making changes to it can be challenging. Any modifications to your application, loan type, or appraisal value could potentially affect the locked rate.

Is a float-down provision worth the cost?

Whether a float-down provision is worth the cost depends on your individual circumstances. If market rates significantly drop during the lock period, it can be advantageous. However, it’s essential to consider the added expenses associated with this feature.

Key takeaways

  • A mortgage rate lock provides stability and protects borrowers from rising interest rates.
  • Some rate locks offer a float-down provision, enabling borrowers to secure lower rates if they become available.
  • Changes to the borrower’s application, loan type, or appraisal value can affect the locked interest rate.
  • Rate locks typically last for 30 to 60 days and can be extended for a fee.
  • Using a float-down provision may result in additional costs.
View article sources
  1. How Households Are Locked In by Rising Mortgage Rates – Wharton School of the University of Pennsylvania
  2. What’s a lock-in or a rate lock on a mortgage? – Consumer Financial Protection Bureau
  3. Thinking of Refinancing Your Mortgage? Here Are Some Tips – SuperMoney
  4. Mortgage Broker Fees: The Complete Guide – SuperMoney