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Freddie Mac's Primary Mortgage Market Survey says that mortgage interest rates have been very unstable in 2025. As of December 11, 2025, the average rate for a 30-year fixed-rate mortgage was 6.22%. This is a small drop from the year-to-date average of 6.62%, but it is still much higher than the lows of 2020 and 2021. In this market, knowing how to lock in your interest rate has become one of the most important things for home buyers and people who want to refinance their homes.
The Federal Reserve cut rates three times in a row in 2025: once in September, once in October, and once in December. The federal funds rate dropped by 25 basis points each time. Even though these cuts were made, mortgage rates haven't gone down as much as a lot of people wanted. This is mostly because long-term mortgage rates don't directly follow the Fed's overnight rate; instead, they follow the 10-year Treasury yield. Because of this difference between monetary policy and mortgage rates, it's hard for borrowers to know when to lock in their rates.
The National Association of REALTORS® says that the average price of a home that is already built will be $415,200 in October 2025. This means that even small changes in interest rates can add up to thousands of dollars in extra payments over the life of a loan. A rate lock is like insurance against rising rates because it keeps your interest rate the same from the time you apply until the time you close. But, like all insurance, it has costs, limits, and other things that borrowers should know about.
When you get a rate quote, clicking "lock" is only one part of the technical side of this decision. Rate locks work in complicated capital markets systems where lenders have to keep track of interest rate risk on hundreds or thousands of loans at the same time. You can get the best possible terms for your situation in the 2026 housing market by knowing how these systems work, what affects your locked rate, and when it's smart to lock or float.
A mortgage rate lock is a contractual agreement between you and your lender that holds a specific interest rate for a designated period, typically ranging from 30 to 90 days. When you lock your rate, the lender commits to honoring that rate at closing, regardless of broader market movements, as long as your loan application details remain unchanged and you close within the lock period. This protection becomes valuable in volatile markets where rates can shift by 0.25% or more in a matter of weeks.
From a capital markets perspective, rate locks represent actual risk that lenders must manage. When a lender locks your rate, they're making a forward commitment to provide capital at that specified rate at a future date. To hedge this risk, lenders typically execute offsetting transactions in the secondary mortgage market, often by selling forward delivery commitments to investors who purchase mortgage-backed securities. This hedging activity explains why lenders carefully monitor rate lock commitments and may charge fees for extensions or modifications.
Rate locks only apply to the interest rate, not to other costs of the loan like origination fees, appraisal fees, or closing costs that are paid to a third party. Your lock agreement will tell you the exact interest rate, the loan program, the points or credits that go with that rate, and when the lock will expire. A lot of lenders give you a written Rate Lock Agreement or Confirmation that explains these terms. If there are any disagreements about what rate should be used at closing, this document will be very important.
The lock period starts when the lender confirms your rate lock, not when you first get a rate quote. Many borrowers think that their first rate quote is set in stone, but quotes are just guesses based on how the market is doing right now. When the lender processes your formal lock request, which usually requires a full loan application and may require payment of an upfront lock fee for longer periods than the usual 30 or 45 days, the actual lock happens.
The mortgage rate environment entering 2026 reflects a period of gradual stabilization after years of extreme volatility. Throughout 2025, rates fluctuated between 6.17% and 7.04% for 30-year fixed-rate mortgages according to Freddie Mac data-a narrower range than the 6.08% to 7.22% seen in 2024, but still demonstrating significant movement that can impact borrowers. The 2025 year-to-date average of 6.62% represents a modest improvement from 2024's average of approximately 6.7%, though rates remain elevated compared to the 3% to 4% range seen during the pandemic years.
The Federal Reserve's policies have had a big but indirect effect on mortgage rates. The federal funds rate stayed in a small range until the middle of 2025. In September, October, and December of 2025, they cut it three times in a row by 25 basis points. The federal funds rate was at its highest point, but mortgage rates only went down by 40 to 50 basis points at the same time. This answer isn't very good because mortgage rates mostly follow the yield on 10-year Treasury bonds. The Fed's overnight rate doesn't make a big difference for them. On the other hand, the 10-year Treasury yield is affected by expectations of inflation, projections of economic growth, and flows of capital around the world.
Economic forecasters project modest continued declines in mortgage rates throughout 2026, with most estimates placing the 30-year fixed rate in the low-6% range by year-end 2026. The Mortgage Bankers Association forecasts rates will average around 6.5% through 2026, while the National Association of Home Builders projects a similar trajectory with rates potentially reaching 6.23% by late 2026. However, these forecasts come with significant uncertainty. Factors including inflation persistence, Federal Reserve policy adjustments, Treasury market dynamics, and broader economic conditions could drive rates higher or lower than current projections suggest.
For borrowers making rate lock decisions in this environment, the key insight is that rates are unlikely to return to pandemic-era lows in the foreseeable future. Historical context provides perspective-according to Freddie Mac data dating back to 1971, the long-term average for 30-year mortgage rates is approximately 7.8%. Current rates around 6.2% to 6.5% remain below this historical average, suggesting that borrowers who can secure rates in this range are obtaining relatively favorable terms by long-term standards, even if they feel elevated compared to recent memory.
One of the most important choices you have to make when getting a mortgage is whether to lock in your interest rate or let it float, which means it will be affected by changes in the market. You need to weigh a number of factors when making this choice: your closing date, how much risk you're willing to take, the state of the market right now, and your ability to keep an eye on rates and act quickly if the markets move in your favor. There is no one right answer for everyone, but looking at your situation in a methodical way can help you make the best choice.
If you have a firm closing date within the next 60 days and are happy with the current rates, lock in your rate right away. A lock gives you peace of mind, which is especially helpful when you've agreed to buy something with a set closing date, when you're refinancing and want to avoid timing risk, or when you think rates are more likely to go up than down. In the current market, where most forecasts say rates will only go down a little, the chance of rates going up by 0.25% to 0.50% may be greater than the chance of catching a small drop. This is especially true for borrowers who are already at or near their maximum comfortable payment levels.
Consider floating your rate if your closing timeline is uncertain or extends beyond 90 days, if you have significant financial flexibility to absorb potential rate increases, or if you believe rates are likely to decline significantly based on your economic outlook. Floating makes particular sense for new construction purchases where completion dates may shift, for borrowers early in their home search who haven't yet found the right property, or for refinancers who can be patient and monitor markets daily to lock at optimal moments. Floating carries no fees, giving you complete flexibility to lock whenever you choose.
A hybrid strategy combines elements of both approaches. Some borrowers begin by floating their rate during early application stages when closing is distant, monitoring markets daily or weekly for favorable entry points. Once closing approaches within 45-60 days, they lock regardless of whether rates have improved, accepting current market terms to eliminate risk during the critical final weeks before closing. This approach requires discipline and active engagement with the process-you must monitor rates consistently and be prepared to lock quickly when you identify favorable conditions, rather than continuing to wait for even better rates that may never materialize.
Rate lock periods usually last between 30 and 120 days, with 45 to 60 days being the most common length for regular purchases. Your lock period needs to be long enough to cover all the steps in the loan process, including filling out the application, ordering and reviewing the appraisal, checking employment and assets, getting homeowner's insurance, clearing up title issues, and working with everyone to set up the closing. If you choose a lock period that is too short, you will have to pay extra fees and be stressed out. If you choose a lock period that is too long, you will have to pay more up front.
Standard rate locks, which last 30 to 45 days, usually don't have an upfront fee. Instead, the cost of the lock is included in the interest rate. Lenders set the prices for their standard lock periods based on how much it costs them to hedge and how the market works. For locks that last longer than 45 days, you usually have to pay a lock fee up front, and the cost goes down as the lock period gets longer. A 60-day lock might cost 0.125% of the loan amount, a 90-day lock might cost 0.375% to 0.50%, and a 120-day lock might cost 0.75% to 1% of the loan amount. If you take out a $400,000 loan, these fees add up to $500 for 60 days, $1,500 to $2,000 for 90 days, and $3,000 to $4,000 for 120 days.
Some kinds of property and loan situations need longer lock periods from the start. It can take 90 to 120 days or even longer to buy a new home because the builder's completion dates can change because of bad weather, problems with the supply chain, or delays in construction. Condominiums that need board approval may need longer locks to make room for the approval process. Some state bond programs and USDA rural development loans take longer to process, which means that locks need to be longer. When you look at these long-term locks, make sure to include the upfront cost in your total loan and closing costs.
Most lenders will let you extend your rate lock if your first one isn't long enough. These extensions usually happen in 15-day increments, with a maximum of three extensions. The costs of extensions are usually similar to the costs of longer initial locks. Each 15-day extension could cost between 0.125% and 0.25% of the loan amount. If your lock expires before closing and rates have gone up a lot, you may have to make a tough choice: either pay for an extension at your original rate or accept the higher current market rate. This means that it's very important to choose the right initial lock period. If you're not sure how long it will take, it's better to choose a longer initial lock.
Rate locks carry both explicit and implicit costs that borrowers should understand fully before committing. The most apparent cost is the upfront lock fee charged for extended lock periods beyond the lender's standard offering. As discussed, these fees typically range from 0.125% to 1% of the loan amount depending on the lock duration. On a $350,000 loan, a 90-day lock fee of 0.50% would cost $1,750 at the time you lock your rate. Some lenders may add this fee to your closing costs rather than requiring payment upfront, but it still represents a real cost of the transaction.
The implicit cost of rate locks appears in the interest rate itself. Lenders build their hedging costs into their rate offerings, meaning a borrower who locks for 60 days may receive an interest rate that's 0.125% higher than what they would receive with a 30-day lock, even without an explicit lock fee. This rate premium represents the lender's cost and risk of maintaining the rate commitment for the extended period. For comparison, 0.125% higher rate on a $350,000 30-year loan translates to approximately $30 more in monthly payment and roughly $10,800 in additional interest over the loan's life.
Extension costs accumulate quickly when closing delays occur. If you initially lock for 45 days but encounter appraisal delays, title issues, or seller-related postponements that push closing beyond your lock expiration, each 15-day extension might cost $500 to $1,000 on a $400,000 loan. Three extensions could total $1,500 to $3,000 in additional costs that you didn't budget initially. This cascading expense structure creates strong incentive to keep your transaction on schedule and to choose an initial lock period with some buffer for unexpected delays.
Float-down or repricing fees represent another cost category. If rates drop significantly after you've locked and you want to capture the lower rate, lenders typically charge a repricing fee of 0.25% to 0.50% of the loan amount to relock at the improved rate. On a $400,000 loan, this fee would be $1,000 to $2,000. You need to calculate whether the interest savings from the lower rate justify the upfront fee. For example, if repricing costs $1,500 and reduces your rate by 0.375%, saving you $82 monthly on a 30-year loan, you break even after 18 months. If you plan to keep the loan longer, repricing makes financial sense; if you plan to refinance or move within a year or two, it doesn't.
Even after locking your interest rate, certain changes to your loan application can result in a different rate at closing. These changes stem from what lenders call "rate adjusters" or "price adjusters"-factors that impact the lender's risk assessment and, consequently, the interest rate. Understanding which changes affect your rate helps you avoid surprises and make informed decisions if circumstances shift during the loan process.
Appraisal value represents one of the most common rate adjustment triggers. If the property appraises for less than expected, your loan-to-value ratio increases, potentially moving you into a higher-risk pricing tier. For example, if you expected to put 20% down on a $400,000 purchase ($80,000 down, $320,000 loan) but the property appraises at only $380,000, your LTV rises from 80% to 84% ($320,000 loan on $380,000 value). This increase might trigger a 0.25% to 0.375% higher interest rate, costing an additional $58 to $87 monthly on your payment. Conversely, if the appraisal comes in higher than expected, improving your LTV, you might receive a lower rate than initially locked.
Credit profile changes can also modify your locked rate. If your credit score drops between the initial rate lock and final underwriting-perhaps because you opened new credit accounts, carried higher credit card balances, or had late payments-you may face a higher rate at closing. Lenders typically re-pull credit within a few days of closing to verify that your financial situation hasn't deteriorated. Even a 20-point credit score decrease can trigger rate adjustments of 0.25% to 0.50% or more, depending on which pricing tier boundaries you cross. This makes maintaining your credit profile throughout the loan process critical.
Loan amount or down payment changes affect your locked rate directly. If you increase your loan amount-perhaps because your earnest money deposit was smaller than initially stated, or closing costs came in higher than estimated-this changes your LTV and potentially your debt-to-income ratio, both of which influence pricing. Similarly, if you reduce your down payment from 20% to 15%, you cross into a higher-risk pricing tier that typically carries a 0.125% to 0.25% higher rate. Any income verification issues that reduce your qualifying income can also affect the rate, as can changes to the loan program itself, such as switching from a conventional loan to an FHA loan due to credit or asset limitations.
One of the most frustrating scenarios in mortgage financing occurs when you lock your rate, only to watch market rates decline during your lock period. In the current environment where rates have trended modestly downward through late 2025, this situation has become increasingly common. While you're protected from rate increases, you're also prevented from benefiting from decreases unless you take specific action-typically paying a repricing fee to secure the lower rate.
Most lenders offer repricing or "float-down" provisions that allow you to relock at a lower rate if markets improve substantially during your lock period. The typical repricing structure requires paying a fee of 0.25% to 0.50% of the loan amount, with some lenders offering one-time repricing rights at 0.25% while others charge 0.50% and allow multiple reprices. The repricing generally applies only if rates drop by a minimum threshold-often 0.25% to 0.375%-and must occur at least 7 to 10 days before closing to allow time for new paperwork and recalculations.
The economic decision to reprice involves calculating your break-even point. Consider this example: You have a $400,000 loan locked at 6.50%, and rates drop to 6.125% three weeks before closing. Repricing costs $1,600 (0.40% of the loan amount). The rate decrease of 0.375% reduces your monthly principal and interest payment by approximately $87 (from $2,528 to $2,441 at 30 years). You break even in 18 months ($1,600 / $87 = 18.4 months). If you plan to keep the loan at least two years, repricing saves money. If you might refinance or move within 18 months, it doesn't.
Some lenders advertise "no-cost float-down" provisions as a competitive feature. These typically allow one-time repricing without an explicit fee if rates drop by a certain threshold. However, the cost is often built into a slightly higher initial interest rate-perhaps 0.125% higher than a comparable lock without float-down protection. Over time, this higher rate might cost more than paying for repricing when needed. Evaluate float-down offers carefully by comparing the total cost over your expected loan holding period rather than focusing solely on the absence of an upfront repricing fee.
When the rate lock ends, it can be one of the most stressful times of getting a mortgage. You might feel rushed as the end of your lock period approaches and you haven't closed yet. This could have serious financial consequences. You can save money and lower your stress in the weeks leading up to closing by knowing how extensions work and how to avoid needing them.
Most lenders only let you ask for a certain number of extensions, and three is a common limit. Most of the time, each extension lasts 15 days and costs between 0.125% and 0.25% of the loan amount. You might be able to get the first extension for free if the delays were caused by things that were clearly out of your control, like the lender or title company having trouble scheduling appraisals. Extensions that come after the first one or that are needed because the borrower has problems, like missing paperwork, usually cost money. Three extensions of 0.20% each on a $350,000 loan would cost an extra $2,100.
Extension requests must occur before your lock expires-you cannot extend a lock that has already expired. If your lock expires before closing and you haven't secured an extension, you'll receive the current market rate at closing. In a rising rate environment, this could mean a significantly higher rate than you originally locked. For instance, if you locked at 6.25% sixty days ago and rates have risen to 6.75%, letting your lock expire without extension costs you 0.50% higher rate-approximately $116 more monthly on a $400,000 30-year loan, or $41,760 in additional interest over the loan's life.
Keep in touch with your lender throughout the process to keep the need for extensions to a minimum. Respond right away to any requests for documents, set up your appraisal as soon as you can, work with your title company to fix any problems with the title right away, and let your lender know if you hear about any possible delays. If you think your closing date might go past the end of your lock, let your lender know right away instead of waiting until the last minute. Requests for extensions made a week in advance are often treated better than requests made the day before they are due.
Certain loan types and property situations require special rate lock considerations that differ from standard purchase or refinance transactions. New construction purchases rank among the most challenging for rate lock management because builder completion dates often shift, sometimes by months. Many lenders require extended rate locks of 90, 120, or even 180 days for new construction, with corresponding upfront fees. The technical challenge involves balancing adequate lock duration against the high cost of very long locks. Some borrowers initially float their rate, monitoring construction progress closely, then locking for 60 to 90 days once the builder provides a firm completion date.
State and local bond programs use tax-exempt municipal bond financing to give first-time home buyers or borrowers with low to moderate incomes interest rates that are lower than the market rate. These programs have special rules for locking in rates that are different from those for regular mortgages. You have to lock in your bond program approval right away because many of them don't let you float. If your lock runs out and you haven't closed yet, you might not be able to extend at your original rate. You usually can't go back to floating. Some programs let you extend your loan, but only if there is still money in the bond allocation. It's very important to know these rules before agreeing to a bond program loan.
The way that rate locks work for adjustable-rate mortgages is different from how they work for fixed-rate loans. When you lock an ARM, you lock in the first fixed-rate period, which is usually five, seven, or ten years. After that, the adjustment periods will depend on the index (like SOFR) and the margin that is stated in your loan documents. The first lock only guarantees your first adjustment period. For the first period, ARM locks usually have the same length and cost structure as fixed-rate locks. However, the overall rate risk profile is different because of the uncertainty about future adjustments.
When you refinance, you may have more options for when to lock in your rate than when you buy a home because you don't have a closing date on your purchase contract that forces you to move forward. This flexibility works both ways: it lets you be more patient when you lock in your rate, which could mean waiting for better market conditions, but it can also make you unable to make a decision because you keep waiting for even better rates that may never come. A lot of people who refinance use a disciplined trigger point strategy. They set a target rate (like 0.75% below their current rate) and lock in right away if rates reach that level, so they don't give in to the urge to wait for small improvements.
In the last ten years, modern mortgage technology has changed how rate lock management works. Most lenders now let borrowers use online portals or mobile apps to see the current locked rate, the date the lock ends, and the loan's progress in real time. These platforms usually send you automated emails or texts when your lock is about to expire—usually 14 days, 7 days, and 3 days before expiration—so you don't have to worry about it happening without warning. Some systems let you ask for extensions right through the portal. This makes what used to be a long phone and paperwork process much easier.
From an implementation perspective, lenders' capital markets systems integrate rate lock data with their hedging platforms, automatically executing offsetting trades in the secondary market as locks occur. This integration means your rate lock creates immediate risk management obligations for the lender, explaining why lock modifications (extensions, reprices) require fees that compensate for the need to unwind existing hedges and establish new ones. Understanding this technical backend helps explain why lenders can't simply extend locks indefinitely without cost-each day of lock creates real hedging expenses.
Rate alert systems are useful for borrowers who are trying to decide whether to lock or float. You can set target rate alerts on many financial websites and lender platforms. These alerts will let you know when rates drop to the level you've set. These alerts stop you from having to check rates several times a day if you're floating your rate and looking for the best times to enter. However, keep in mind that rate quotes are only estimates until you actually lock. You need to be ready to act quickly when alerts go off, usually locking that same day, because rates can change again in a matter of hours.
Most lenders have switched from paper processes to digital rate lock confirmations and documentation, and electronic signatures are now the norm. You will get your rate lock agreement by email, usually as a PDF that you need to sign electronically. This paper tells you your locked rate, any points or credits, the date your lock ends, the loan program, and the address of the property. Save this document right away and read it carefully to make sure all the information is correct. If you find any mistakes, you must tell your lender within 24 hours. If there are any problems later on, this electronic confirmation will be your proof of the locked rate.
Many borrowers make avoidable mistakes during the rate lock process that cost them money or create unnecessary stress. The most common error is locking too early when your closing timeline is still uncertain. Borrowers sometimes lock immediately upon application, excited to secure a good rate they see that day, only to discover their closing won't happen for 75 days-well beyond their 45-day lock period. This results in expensive extensions or, worse, letting the lock expire and accepting higher current market rates. Wait to lock until you have a firm closing date or purchase contract, unless you're willing to pay for an extended lock period.
On the other hand, waiting too long to lock causes the opposite problem. Some borrowers float their rate in the hopes of getting better terms, and they keep waiting even though their closing date is only 30 days away. If rates go up during this time, they've turned what could have been manageable borrowing costs into limits that are too high to afford. Before you start floating, set a strict lock trigger. Decide ahead of time what rate or rate improvement would make you lock right away, and then follow through with that plan when conditions meet your requirements instead of hoping for even better terms.
Not telling your lender about changes to your application is another expensive mistake. If your income changes, you're thinking about using gift money that wasn't included in the original application, the seller agrees to a lower purchase price, or you're thinking about changing the amount of your down payment, let your lender know right away. Changes found during final underwriting can raise your locked rate because of new risk factors, or they might even require you to restructure your application, which would mean that your original lock is no longer valid. If you tell your lender about any changes, they can see if they change your locked rate before you get too far into the process.
Not reading your rate lock agreement carefully causes problems surprisingly often. Some borrowers assume their lock covers one set of terms when the actual agreement specifies something different. Perhaps you thought you locked with one discount point paid at closing, but the agreement shows 1.5 points. Or you believed your lock was for 60 days, but it's actually 45 days. These misunderstandings create conflicts during closing that could have been avoided by spending five minutes carefully reviewing the lock confirmation when you received it and immediately addressing any discrepancies with your lender.
Different types of borrowers should approach rate locks with strategies tailored to their specific situations. First-time home buyers typically benefit from locking once they have a ratified purchase contract, even if rates might potentially improve slightly. The certainty a lock provides helps first-timers with budgeting and reduces the stress of an already complex process. Many first-time buyers are operating near the upper limit of their comfortable payment range, making them more vulnerable to rate increases. A 0.25% rate increase that adds $58 monthly to a $400,000 loan might push a tight budget into unaffordable territory.
Move-up buyers with existing home equity often have more financial flexibility and might consider selective floating. If you're selling a home with substantial equity and the proceeds significantly reduce how much you need to borrow for your next home, a rate increase creates less affordability impact than it would for a first-time buyer starting with minimal savings. However, if you're contingent on selling your current home to fund the new purchase, lock your rate once you're under contract on both properties to eliminate rate risk during an already complex coordinated transaction.
Refinancing households should evaluate rate locks based on their break-even analysis. Since you already have housing and aren't facing a contract deadline, you can be more selective about timing. Calculate your break-even point-how many months until your interest savings offset your refinance closing costs-and lock when rates drop enough that your break-even occurs within 24 months. If your break-even point exceeds 24 months, rates haven't dropped far enough yet, and you should continue floating. Once rates hit your target threshold, lock immediately rather than hoping for marginally better terms.
Real estate investors and borrowers purchasing investment properties should generally lock early and lock long. Investment property loans typically carry higher interest rates than owner-occupied loans and are more susceptible to rate volatility. Many investors are more focused on cash flow and return on investment calculations than emotional homeownership factors, making the slightly higher cost of extended lock periods (60-90 days) a worthwhile investment for rate certainty. Additionally, investment property transactions sometimes face complications during due diligence or tenant management transitions that can delay closing, making longer lock periods prudent risk management.
As you navigate the mortgage process in 2026, approach rate locks as strategic financial decisions rather than reactive choices driven by daily rate movements or anxiety. Current market conditions-with 30-year fixed rates around 6.22% and modest projected declines through 2026-suggest that borrowers who can secure rates in the 6.00% to 6.50% range are obtaining relatively favorable terms by historical standards, even if these rates feel elevated compared to pandemic-era lows.
Your rate lock decision should align with your closing timeline, risk tolerance, and overall financial situation. Lock when you have a firm closing date and are satisfied with current rate offerings, recognizing that waiting for perfect conditions often backfires as rates can rise as easily as fall. Choose a lock period that provides adequate buffer beyond your expected closing date-adding 10 to 15 days of cushion to your expected timeline often prevents expensive last-minute extensions.
Throughout the lock period, maintain proactive communication with your lender, respond promptly to all requests, and immediately disclose any changes to your application that might affect your locked rate. Understanding the technical aspects of rate locks-how they work, what they cost, what can change them-empowers you to make informed decisions and avoid common pitfalls. With current volatility likely to persist through 2026, protecting yourself from rate increases through a well-timed, well-managed rate lock remains one of the most valuable actions you can take in your mortgage transaction.
Not always. The timing of your lock depends on your situation and when you want to close. If you're buying a house and have a signed contract with a closing date 30 to 60 days away, locking in right away makes sense to protect yourself from rate hikes while your deal is still going on. Floating your rate, on the other hand, lets you take advantage of changes in the market if you're just starting your home search and don't have a specific property under contract or if you're refinancing and don't need to do it right away. Rates are currently around 6.22% (Freddie Mac, December 11, 2025), and they are expected to drop slightly through 2026. It is risky to wait for rates to drop a lot more; instead, lock in when you find terms you like, rather than hoping for big improvements that may not happen.
Different lenders and lock periods have different rates for rate locks. Most standard 30-45 day locks don't cost anything up front, but extended locks can cost between 0.125% and 1% of the loan amount. A 60-day lock usually costs between 0.125% and 0.25% (or $500 to $1,000 on a $400,000 loan). A 90-day lock, on the other hand, costs between 0.375% and 0.50% ($1,500 to $2,000 on $400,000). New construction that needs locks that last 120 days or longer could cost 0.75% to 1% ($3,000 to $4,000 on a $400,000 loan). Some lenders include the cost of a lock in the interest rate, which is a little higher than the fee. For example, a 60-day lock might have a rate that is 0.125% higher than a 30-day lock. When looking at extended locks, look at both the fee and the rate. Figure out how much the total cost will be over the time you plan to hold the loan.
If rates go down after you lock, you usually have to stick with your locked rate unless you pay to reprice. Most lenders have float-down or repricing options that let you relock at the lower rate by paying a fee, which is usually between 0.25% and 0.50% of the loan amount. To figure out if repricing makes sense for your finances, divide the repricing fee by the amount you save each month by getting a lower interest rate. If you plan to keep the loan for more than 18 months, it's worth it to pay $1,600 to get it back to its original price and save $87 a month. Some lenders offer "free float-down" options, but these often have slightly higher initial rates that may end up costing you more in the long run than paying for repricing when you need it. The most important thing to remember about rate locks is that they keep you from getting automatic benefits from decreases but protect you from increases. This is the basic idea behind rate lock insurance.
Yes, if important application details change between the initial lock and closing, your locked rate can change. Some common changes that can affect locked rates are: the appraisal value is different from what was expected (which changes your loan-to-value ratio), your credit score goes down between the time you apply and the time you get your final verification, the loan amount goes up or down, the down payment amount changes, you switch loan programs (for example, from conventional to FHA), or you can't verify income sources that were originally documented. Each of these changes makes the lender's risk assessment different, which can cause rate adjusters to kick in. These are usually between 0.125% and 0.50% higher, depending on the change. To avoid rate surprises, let your lender know right away if any of the information on your application might change. Keep your credit profile up to date throughout the process (don't open new credit accounts or raise your credit card balances), and make sure you give them all the right information from the start so your initial lock reflects your actual situation.
Pick your lock period based on when you realistically expect to close, plus some extra time for any delays that come up. For normal purchases with no problems, 45 days is enough time for the appraisal (7–14 days), underwriting (7–10 days), clear-to-close preparations (3–5 days), and closing coordination. If you think you'll close in 35 days, lock for 45–60 days. This gives you an extra 15 days. It takes 90 to 120 days or more to build a new house because builders' completion dates often change. Condominiums that need board approval might take 60 to 75 days. Refinances that don't have an appraisal contingency can often close in 30 days. If you choose a lock period that is too short, you will have to pay for extensions that cost a lot of money (usually $500 to $1,000 for every 15 days on a $400,000 loan). If you choose a lock period that is too long, you will have to pay more up front. If you're not sure, go with a longer initial lock instead of planning to extend. Initial lock fees are usually lower than cumulative extension fees.
When you lock your rate, the lender agrees to a certain interest rate for a certain amount of time (your lock period). This protects you from rate increases, but you won't be able to benefit if rates go down without paying a repricing fee. Floating means that your rate stays unlocked and changes every day based on how the market is doing. If rates go up, you can benefit, but if they go down, you are at risk of losing money. Floating doesn't cost anything and lets you lock in at any time you want. Your timeline (lock if closing soon), risk tolerance (lock if you can't handle rate increases), market outlook (float if you expect big improvements), and financial flexibility (float if small payment increases won't affect affordability) all play a role in your decision to lock or float. A lot of borrowers use a hybrid approach: they float at first while they shop or fill out their application, and then they lock in 45 to 60 days before closing to get rid of risk during the most important time.
Yes, most lenders let you extend your rate lock. Usually, you can do this every 15 days, up to three times. Extension fees usually range from 0.125% to 0.25% of the loan amount for every 15-day period. For a $400,000 loan, this would be $500 to $1,000 per extension. You have to ask for extensions before your lock runs out; you can't extend a lock that has already run out. If your lock runs out without an extension and current market rates have gone up, you'll get the higher current rate at closing. To avoid needing extensions, pick a good initial lock period with extra time, respond quickly to all lender requests, let everyone know about possible delays ahead of time, and work with your team (realtor, title company, lender) to keep the deal on track. If you think closing might happen after your lock expires, ask for an extension at least a week in advance instead of waiting until the day before it expires. Requests made ahead of time often get better treatment.
The way rate locks work is mostly the same for all types of loans, but government-backed loans (FHA, VA, USDA) often have different timelines and requirements that change the length of the lock. FHA and VA appraisals usually take longer than regular appraisals because they need to check the property's condition as well as its value. Plan for 14 to 21 days instead of 7 to 14 days. It can take an extra 7 to 10 days to process USDA loans because they need more proof of rural designation and income. Some lenders charge different lock fees for government loans. For example, VA loans may have better terms for veterans. Some FHA loans use state bond programs to fund their mortgages. These loans have special rules: many don't allow floating, require locking right away when the bond is allocated, and don't let you relock if your lock expires. Before you decide on a lock strategy, make sure you know the exact requirements and restrictions for your loan program.
Mortgage rates can change several times a day. Most lenders update their rate sheets at least once a day, usually in the morning after looking at how Treasury yields and mortgage-backed securities moved overnight. Some lenders change their rates several times a day, especially when the market is very volatile. Rates are usually most stable in the morning, but they can change in the middle of the day or in the afternoon if important economic data comes out or if the Treasury markets move a lot. If you want to lock in a certain day, try to do it in the morning before anything bad happens during the day. But don't worry too much about when you lock in during the day. The difference between morning and afternoon locks is usually very small (0–3 basis points or 0.00%–0.03%). Instead of trying to figure out the exact hour of the day to lock, pay more attention to picking the right day based on larger market trends and your closing timeline.
Save the confirmation document (usually a PDF sent by email) as soon as you lock in your rate. The locked rate, the date the lock ends, the points or credits, and the loan program you chose are all listed in this document. Put all of your rate-related emails and other communications in a digital folder. This should include the first rate quotes that showed the rates available when you locked, any changes or extensions to the rate lock that came after that, requests and confirmations for repricing if you relocked at a lower rate, and the final closing disclosure that showed the rate that was actually used at closing. These papers are important if you and the lender disagree about what rate should have been used or if you need to talk to the lender's management or the government. If you asked for extensions, write down when you asked for them, if they were granted, how much they cost, and when they would end. If your final rate at closing is different from your locked rate, you will need to show your original lock confirmation to prove what was agreed upon.
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