Mortgage Rate Lock: When to Lock, How Long, and Float-Down Options

A mortgage rate lock is a lender commitment to hold your quoted interest rate for a defined period, regardless of what the market does before closing. Lock your rate after signing a purchase agreement, choose a lock period that extends 5 to 7 days beyond your expected closing date, and ask about float-down provisions before you commit, since not every lender offers one.

Quick Answer:

• A rate lock holds your quoted rate for a set period, typically 30 to 60 days, no matter which way the market moves.
• Lock after signing a purchase agreement, not before; locking too early wastes lock days and risks expiration before closing.
• 30-day locks carry the lowest pricing; 45- and 60-day locks typically cost 0.125% to 0.25% more in rate or upfront fee.
• A float-down provision lets you capture a lower rate if rates drop after locking; Tomo Mortgage includes one if rates drop 0.25% or more.
• Get your locked rate, expiration date, and loan amount confirmed in writing. A verbal confirmation is not enforceable.

Step 1: Understand What a Rate Lock Actually Does

A rate lock is a commitment from your lender to hold your quoted interest rate for a defined period. If rates rise after you lock, you keep the rate you locked. If rates fall, you are held to that same locked rate, unless your loan includes a float-down provision. A rate lock protects you from upward movement; it does not automatically give you the benefit of downward movement.

Step 2: Time the Lock Correctly

Lock your rate after signing a purchase agreement, not before. Locking before you have a contract can waste lock days you cannot get back and risks the lock expiring before you actually close. Floating, meaning delaying your lock in hopes rates fall, is a bet on where rates are headed, and that bet carries asymmetric downside. If you are right, you save a little, but if you are wrong in a volatile rate environment, you can lose more than you would have saved.

Step 3: Choose the Right Lock Period

Lock periods typically run 30, 45, or 60 days. A 30-day lock carries the lowest pricing, since it carries the least market risk for the lender. Extending to 45 or 60 days typically costs 0.125% to 0.25% more, either in rate or as an upfront fee. As a general rule, a lock period that extends 5 to 7 days beyond your expected closing date, gives you a buffer against minor delays without paying for more lock time than you need.

Step 4: Ask About Float-Down Provisions Before Locking

A float-down provision lets you capture a lower rate if rates drop by a defined threshold after you lock. Not every lender offers this, and terms vary where it exists. Tomo Mortgage includes a float-down if rates drop 0.25% or more after locking. You should always confirm float-down availability and its exact threshold in writing before you lock, not after, since this is a term of the lock itself, not something added later.

Step 5: Get Confirmation in Writing

Always request a rate lock confirmation letter that states your locked rate, the lock expiration date, and the loan amount. A verbal confirmation from a loan officer is not enforceable if a dispute comes up later. This document is what you would refer back to if your closing runs long or if a float-down needs to be exercised.

Step 6: Monitor the Closing Timeline Actively

If closing is delayed past your lock expiration date, most lenders charge an extension fee, typically 0.125% to 0.25% of the loan amount per 15-day extension. As soon as a delay looks likely, identify the source immediately. Appraisal scheduling, title issues, and gaps in borrower documentation are the most common culprits, and each one is easier to resolve with more lead time before your lock runs out.

A Common Misconception

Lenders are not required to lower a locked rate if market rates fall, unless your loan agreement specifically includes a float-down clause. Borrowers who assume this protection exists without confirming it in writing have no recourse if rates drop after they lock. If a lower rate later becomes available and your lock does not include a float-down provision, you are held to your original locked rate for that loan.

Frequently Asked Questions (FAQs)

What happens if my rate lock expires before closing?

Most lenders charge an extension fee, typically 0.125% to 0.25% of the loan amount per 15-day extension, to keep your locked rate in place until closing.

Should I lock my mortgage rate now or wait for rates to drop?

Lock once you have a signed purchase agreement rather than trying to time the market. Floating in hopes of a rate drop carries asymmetric downside risk if rates move the other way instead.

What is a float-down option on a mortgage rate lock?

A provision that lets you capture a lower rate if rates drop by a defined threshold after you lock, instead of being held to your original locked rate. Not all lenders offer one; Tomo Mortgage includes a float-down if rates drop 0.25% or more.

How much does a longer rate lock period cost?

A 30-day lock carries the lowest pricing. Extending to 45 or 60 days typically costs 0.125% to 0.25% more, in rate or as an upfront fee.