Understanding Mortgage Rate Locks

What is a Rate Lock?

• Guarantees your interest rate for a specific period
• Protects against market fluctuations
• Provides peace of mind during loan processing
• Helps with accurate budget planning

When to Lock Your Rate

Factors to Consider

• Current market conditions and trends
• Your closing timeline
• Risk tolerance level
• Rate lock fees and costs

Optimal Timing

• After loan application approval
• When rates align with your goals
• When you have a firm closing date
• During periods of rate volatility

Rate Lock Periods

Common Lock Durations

• 15-day lock
• 30-day lock (most common)
• 45-day lock
• 60-day lock
• 90-day lock (for new construction)

Choosing the Right Duration

• Consider your closing timeline
• Account for potential delays
• Balance cost vs. duration
• Factor in loan complexity

Understanding Lock Fees

• Longer locks typically cost more
• Some lenders offer free short-term locks
• Lock extension fees
• Float-down option costs

Float-Down Options

Understanding float-down provisions:

• One-time opportunity to lower your rate
• Usually requires significant rate drop
• Additional fees may apply
• Timing restrictions
• Market condition requirements

Rate Lock Strategies

• Monitor market trends closely
• Compare rates from multiple lenders
• Consider locking on rate dips
• Evaluate float-down options
• Plan for possible extensions
• Document your rate lock agreement

Common Rate Lock Questions

What if Rates Drop?

• Float-down options availability
• Renegotiation possibilities
• Cost-benefit analysis

What if Closing is Delayed?

• Lock extension options
• Extension costs
• Alternative solutions