{"id":4361,"date":"2024-11-19T14:31:18","date_gmt":"2024-11-19T19:31:18","guid":{"rendered":"https:\/\/tomo.com\/blog\/?p=4361"},"modified":"2025-09-10T10:59:23","modified_gmt":"2025-09-10T15:59:23","slug":"what-is-a-lock-in-the-mortgage-world","status":"publish","type":"post","link":"https:\/\/tomo.com\/blog\/what-is-a-lock-in-the-mortgage-world\/","title":{"rendered":"What is a \u201clock\u201d in the mortgage world?"},"content":{"rendered":"\n<p>Locking in a mortgage rate is a strategic move that can secure a set <a href=\"https:\/\/tomo.com\/blog\/how-is-the-interest-rate-on-a-home-loan-calculated\/\" title=\"interest rate\">interest rate<\/a> for a specific period\u2014helping to protect you from potential rate hikes before <a href=\"https:\/\/tomo.com\/blog\/are-closing-costs-a-good-way-to-pick-a-lender\/\" title=\"closing\">closing<\/a>. But locking in has its complexities. Let\u2019s break down what rate locks are, how they work, why trying to \u201cgame\u201d the market isn\u2019t always the best idea.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Why locking in a mortgage rate matters<\/h3>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>Mortgage rates change daily <\/strong>based on factors like the bond market, <a href=\"https:\/\/tomo.com\/blog\/why-the-fed-doesnt-actually-change-your-mortgage-rates\/\" title=\"Federal Reserve \">Federal Reserve<\/a> decisions, and broader economic conditions. Locking your rate means you\u2019re protected if rates rise before you close.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>Say you\u2019re offered a 6% interest rate on a $300,000 loan. Without a rate lock, a jump to 6.5% could increase your monthly payment from $1,799 to $1,896\u2014an extra $97 per month. Over the first 10 years of your mortgage, that adds up to $11,640 in additional payments.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/tomo.com\/mortgage\/rates?utm_source=tomo_blog\">See today&#8217;s rates<\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">A float-down policy can be a life saver<\/h3>\n\n\n\n<p><\/p>\n\n\n\n<p>Now, a lock protects you if rates go up\u2014but what if rates drop? To protect buyers from these sudden moves it\u2019s important to work with a lender (<a href=\"https:\/\/tomo.com\/mortgage?utm_source=tomo_blog\" title=\"ahem, Tomo Mortgage\">ahem, Tomo Mortgage<\/a>) that offers a \u201cfloat down\u201d policy. That means that if you lock, and the <a href=\"https:\/\/tomo.com\/blog\/better-to-buy-now-or-wait-for-interest-rates-to-drop-weve-got-the-answers\/\" title=\"rates drop by 0.25 basis points\">rates drop by 0.25% <\/a>or so, you\u2019ll get a better rate anyway. That way you don\u2019t have to stress about the little ups and downs in the market all day, every day.\u00a0<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>Here\u2019s how our float-down actually works:<\/strong> <\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If market rates fall by at least <strong>0.25%<\/strong>, your locked rate may be reduced by <strong>0.125%<\/strong>.<\/li>\n\n\n\n<li>The adjustment scales: for each additional 0.125% market decline, your rate is lowered another 0.125%.<\/li>\n\n\n\n<li>It can only be used <strong>once per loan<\/strong>, and your closing date must be <strong>at least 7 days away<\/strong>.<\/li>\n\n\n\n<li>We use <strong><a href=\"https:\/\/www.freddiemac.com\/pmms\" target=\"_blank\" rel=\"noopener\" title=\"Freddie Mac\u2019s Primary Mortgage Market Survey\">Freddie Mac\u2019s Primary Mortgage Market Survey<\/a><\/strong> (released weekly on Thursdays) to measure rate changes.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/tomo.com\/blog\/wp-content\/uploads\/2025\/09\/Float-Down-Policy-1-1.pdf\">See the full float-down policy<\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How a mortgage rate lock works: how long to lock<\/h3>\n\n\n\n<p><\/p>\n\n\n\n<p>A rate lock usually lasts 30 to 60 days to cover the time needed to close the loan. Some lenders offer longer lock periods, but this often comes at an extra cost. And, honestly, a super long lock period only makes sense if you\u2019re not moving for a long while <em>and<\/em> there\u2019s a historically low interest rate at the moment that you don\u2019t want to slip away.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>For example, imagine a lender provides a standard 45-day lock at no extra charge. However, if you need a 90-day lock for a new construction property, they might charge you an additional 0.25% of the loan amount, or $750 on a $300,000 loan.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Locking vs. lock extension fees<\/h3>\n\n\n\n<p><\/p>\n\n\n\n<p>If your lock expires before closing, you might need to extend it. Extension fees can vary, typically around 0.125%\u20130.375% of the loan amount per day. If you\u2019re extending a $300,000 loan lock for 10 days at a 0.125% fee, that\u2019s an extra $375. Make sure to stay on top of your timeline to avoid these costs.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Are lock fees lender-specific or market-driven?<\/h3>\n\n\n\n<p><\/p>\n\n\n\n<p>Lock fees are primarily lender-specific. Each lender determines their own fees based on their policies, risk tolerance, and competitive positioning. Some may include a basic 30- or 45-day lock with no additional cost, while others charge for even short-term locks.<\/p>\n\n\n\n<p>Lock fees can also vary based on factors like loan type, size, and borrower <a href=\"https:\/\/tomo.com\/blog\/what-credit-score-do-i-need-to-buy-a-home\/\" title=\"credit profile\">credit profile<\/a>. Borrowers should ask about lock fees when comparing lenders, as they\u2019re not always upfront or standardized.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>Now, while fees are lender-specific, broader market conditions do influence how lenders approach rate locks. During times of volatility, lenders may increase lock fees to cover the risk of rate changes during the lock period. In a rising rate environment, lenders may raise lock fees or charge more for extended periods.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Trying to time the market? Why it\u2019s often better to lock<\/h3>\n\n\n\n<p><\/p>\n\n\n\n<p>It\u2019s tempting to \u201ctime\u201d your rate lock to get the lowest possible rate. But <a href=\"https:\/\/tomo.com\/blog\/will-mortgage-interest-rates-go-down\/\" title=\"mortgage rates fluctuate daily\">mortgage rates fluctuate daily<\/a> (often multiple times a day, in fact), and waiting too long can backfire.&nbsp;<\/p>\n\n\n\n<p>You might see news that the Fed is going to cut interest rates, for example. You might think\u2014if everyone says the Fed is going to cut rates in a week, I should wait until they make that decision and get a lower rate. The problem is that banks will respond to this same news too, and they might preemptively lower rates (expecting it to drop), and they might over-correct for anticipated cuts down the road. If the Fed cuts rates, but they cut a little less than they expected, rates might actually go up after the Fed decision.&nbsp;<\/p>\n\n\n\n<p>Now, if you\u2019re trying to play the market, you might be out of luck. If you lock in with a float-down policy, you\u2019re covered either way.&nbsp;<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What if you want to switch lenders after locking a rate?<\/h3>\n\n\n\n<p><\/p>\n\n\n\n<p>You can learn more about <a href=\"https:\/\/tomo.com\/blog\/can-you-switch-lenders-while-buying-a-house-absolutely-and-it-might-save-you-big\/\" title=\"the benefits of rate shopping here,\">the benefits of rate shopping here,<\/a> but once you lock a rate with a lender, you\u2019re locked in for that period. If you want to switch lenders or go with a different rate, you\u2019ll need to let your original rate lock expire or terminate the application with the first lender.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Common pitfalls and what to watch out for<\/h3>\n\n\n\n<p><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Not locking in time. <\/strong>Waiting too long can mean missing a favorable rate. Coordinate with your lender to lock at an optimal time, given your closing schedule and current market conditions.<\/li>\n\n\n\n<li><strong>Overpaying for extensions. <\/strong>If your lock expires before closing, extension fees can add up quickly. Plan your timeline carefully to avoid these costs.<\/li>\n\n\n\n<li><strong>Understand the float-down policy. <\/strong>Lenders develop policies that try to account for the constant ups and downs in interest rates (they make less money if the rate you locked is lower than the rates at closing). Some lenders only honor a float-down if rates drop by a certain minimum, or they may only check rates on set days rather than the daily low. It\u2019s important to understand these rules, and chat with your Loan Advisor about all the nitty gritty, so there\u2019s no surprises.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Final thoughts: should you lock your rate?<\/h3>\n\n\n\n<p><\/p>\n\n\n\n<p>Locking your mortgage rate provides security and stability in a volatile market. With recent rate fluctuations, locking when you find a rate close to recent averages can help you avoid future hikes. By understanding your lender\u2019s lock fees, extension policies, and options like float-downs, you can make an informed decision.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/tomo.com\/blog\/tomo-mortgage-rates-monitor\/\">See current interest rate predictions<\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<p>Give us at Tomo Mortgage a call to get started today: <strong>737-510-2523<\/strong><\/p>\n\n\n<div style=\"padding-top:var(--wp--preset--spacing--30);padding-bottom:var(--wp--preset--spacing--30);padding-left:var(--wp--preset--spacing--30);padding-right:var(--wp--preset--spacing--30);margin-top:var(--wp--preset--spacing--30);margin-bottom:var(--wp--preset--spacing--30);margin-left:0;margin-right:0;\" class=\"has-link-color wp-elements-c54b177fd5d2f341f8967a20726f2ac0 wp-block-post-author has-text-color has-contrast-color has-background has-tertiary-background-color has-large-font-size\"><div class=\"wp-block-post-author__content\"><p class=\"wp-block-post-author__name\"><a href=\"https:\/\/tomo.com\/blog\/author\/jacobhayes\/\" target=\"_self\">Jacob Hayes<\/a><\/p><p class=\"wp-block-post-author__bio\">Jacob Hayes is a Team Lead and Senior Loan Advisor at Tomo Mortgage, dedicated to helping clients navigate the home financing process. With deep expertise in loan products and offerings, Jacob serves as both a trusted advisor and a customer advocate, ensuring clients understand their options and make informed decisions.<\/p><\/div><\/div>\n\n\n<p>If you&#8217;re ready to start your journey to homeownership, <a href=\"https:\/\/tomo.com\/mortgage\/app\/preapproval?utm_source=tomo_blog\" title=\"\">get pre approved with Tomo Mortgage today.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Locking in a mortgage rate is a strategic move that can secure a set interest rate for a specific period\u2014helping to protect you from potential rate hikes before closing. But locking in has its complexities. Let\u2019s break down what rate locks are, how they work, why trying to \u201cgame\u201d the market isn\u2019t always the best [&hellip;]<\/p>\n","protected":false},"author":33,"featured_media":3758,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[13,38],"tags":[],"class_list":["post-4361","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-home-buying-guide","category-mortgage-dictionary"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/tomo.com\/blog\/wp-content\/uploads\/2024\/08\/rocket-vs-chase-tomo-1-jpg.webp","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/4361","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/users\/33"}],"replies":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/comments?post=4361"}],"version-history":[{"count":6,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/4361\/revisions"}],"predecessor-version":[{"id":7766,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/4361\/revisions\/7766"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media\/3758"}],"wp:attachment":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media?parent=4361"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/categories?post=4361"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/tags?post=4361"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}