If your rate lock expires before this time, it can be extended—just check with your lender to find out if doing so will result in any additional fees. Until then, your interest rate, and therefore payments, are subject to daily market fluctuations based on how the mortgage market is doing. Learn more about how rates work here. If market volatility results in interest rates going up then the total cost of your loan and your monthly payments may end up higher than the original quote by your lender.
This feature may come with additional costs, so find out how rate lock and float down options work with your lender. Remember, locking in a rate simply protects against any future market volatility, and rates could go up or down from the moment you lock. In the end, choosing when to lock your rate is about committing to an interest rate where you feel confident in your ability to make your monthly mortgage payments. It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter.
Find Rates Now Checking rates won't affect your credit score. Knowing when to lock in your mortgage can be tricky, but the actual process for locking is pretty simple.
Locking down your interest rate can give you peace of mind and help you budget your monthly mortgage payment. Skipping the rate lock is a gamble. If rates creep higher while your loan is still in process, your monthly payment can increase and might impact your loan qualification.
You could also pay thousands more over the life of a loan. Just a 0. Compare that to a 0. Between getting a mortgage pre-approval and submitting your mortgage application, monitor mortgage rates in your area. Ask your real estate agent and loan adviser for their input, too. If rates are dropping, then you might decide not to use the lock at all. Learn More: How to Apply for a Mortgage. Depending on the lender, you can usually lock in the rate for 30, 45, or 60 days — sometimes longer.
Beyond that time frame, you might have to pay a higher fee to extend the lock — typically, the longer the lock-in period, the higher the fee. Some lenders charge a separate fee for a rate lock. 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.
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While interest rates change all the time, a mortgage rate lock ensures the rate on your mortgage stays the same, from the initial quote to closing. Consider these key points about rate locks, and how you can use a lock to your advantage.
A rate lock is a guarantee that a mortgage lender will honor a specific interest rate at a specific cost for a set period. The benefit of a mortgage rate lock is that it protects you from market fluctuations. For example, if your lender locks in your rate at 3. Lenders usually charge an additional fee for extending the term of the rate lock period, however, so ask about what to expect if you need to extend the lock.
It depends on the mortgage lender. Some lenders offer a mortgage rate lock once the borrower is preapproved with just an address of a prospective home. If you lock too early, however, you might end up exceeding the expiration date and facing extension fees or a new rate. Also, keep in mind that the lender can void a rate lock if certain items on your credit report or mortgage application change between the time of your agreement and final underwriting.
The sweet spot is the optimal combination of the interest rate, term and costs. Ask about the rates for several lock periods: 30, 45 or 60 days. Any term longer than 60 days gets pricey, so it might be smarter to wait until you get closer to the closing and check again.
The answer depends on your mortgage lender. While and day rate locks are the norm, you might be able to find significantly longer options that stretch closer to a full year.
Of course, you might have to pay a higher fee for a longer lock. In some cases, that can be an easily justified cost, though. For borrowers of construction loans, for instance, paying for an eight-month rate lock might save them money in the long run if interest rates rise. In addition to a standard rate lock on a mortgage, some lenders offer a float-down lock, which is designed to help you take advantage of lower rates if they become available before you close the loan.
Float-down locks come with a win-win: You get the assurance of your rate now, plus a lack of regret if that rate drops. For example, if rates fall by a tiny amount, it might not be enough to actually put the float-down policy in action. Check the details to understand the threshold that rates must cross in order to exercise the float-down capability.
Your mortgage lender might offer to extend the rate lock, either free or for a fee. In that event, the loan would be based on the new prevailing rate. If rates have gone up, it might be cheaper to pay the extension fee upfront. Find out when your loan is expected to close and work backward to determine when to lock the rate. Try to give yourself some cushion: If you think you need 45 days to close your loan, find out what the interest rate and cost would be if you locked it for a day period.
However, consider the implications of changing lenders at this stage.
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