Rate Lock
Definition and meaning of Rate Lock in real estate.
A rate lock is a guarantee from a mortgage lender to hold a specific interest rate and points for a borrower for a specified number of days.
In more detail
Securing a lock protects the buyer from rising interest rates during the underwriting and processing phase of the home purchase. Most locks are set for 30, 45, or 60 days, and the loan must close within this window to guarantee the rate. If market rates fall after locking, the borrower is typically stuck with the locked rate unless the agreement includes a float-down option.
Home buyers should time their rate lock carefully to ensure it does not expire before their scheduled closing date.
Key facts
| Category | Mortgages & Financing |
|---|---|
| Typical timing | 30 to 60 days |
| Watch out for | Expiration before the loan closes |
| Applies to | Mortgage rate and points |
A buyer locks in a five and a half percent interest rate for 45 days, meaning their rate will remain five and a half percent even if market rates rise to six percent before they close on the house.
Frequently asked questions
Can I change my mortgage rate after I lock it?
Generally, you cannot change the rate unless your agreement has a float-down clause, which allows you to adjust to a lower rate if market rates drop before closing.
What happens if my rate lock expires before closing?
If the lock expires, you may have to accept the current higher market rate, pay a lock extension fee, or restart the application process.