Rate lock

A rate lock is an agreement between the borrower and lender to hold a specific interest rate for a defined period, usually 30 to 90 days, while the loan moves through underwriting toward closing. Without a lock, the borrower's rate is at the mercy of daily market movement.

How it works: the lender quotes a current rate that's typically only good for the day. The borrower can take the quoted rate and lock it for a chosen period, 30, 45, 60, or 90 days, with longer locks priced higher. The lock has a cost, expressed either as a slightly higher rate or as a fee, but the lender is then committed to fund at that rate even if market rates move up before closing. If market rates drop after the lock, some lenders allow a one-time "float-down" to a lower rate, sometimes for a fee.

Why it matters: mortgage rates can move meaningfully even within a single week. A borrower under contract on a home with closing scheduled in 30 days has real exposure to rate movement. The lock removes that uncertainty and lets the borrower budget for a known monthly payment.

Common gotcha: locks have expiration dates. If closing is delayed beyond the lock period, the borrower may need to extend the lock (often at a fee) or relock at current market rates, which may be higher than the original lock. For borrowers in markets with slow closings or in situations with potential delays, choosing a longer lock period upfront (even at slightly higher cost) sometimes produces better outcomes than risking an extension.