What If You Lock in a Mortgage Rate — and the Rate Goes Down?

Written by Bill MacDonaldJuly 21st, 20223 minute read

When an interest rate is locked, the rate is guaranteed for a specific period of time.

Lenders guarantee the interest rate based on the amount of time that it will take to process the mortgage, so if a lender estimates 45 days to process the mortgage, a conservative lock time is 60 days. Lenders are able to extend the lock period for a premium.

Even if interest rates go up during that period, your locked interest rate will be protected.

And if the interest rates go down, will the lender give you the lower rate? Unfortunately, probably not. You will still close at the locked rate.

Interest rates that are not locked are called “floating” rates. Your loan will close at the current interest rate just prior to closing, and your lender will assign the current rate to the mortgage.

How Do I Know if My Interest Rate Is Locked?

The federal government requires lenders to disclose whether the interest rate is "locked" on the loan estimate form.

The "Loan Estimate" (formerly known as the "good faith estimate") is a new form that went into effect on October 3, 2015. It must be provided to applicants no later than three business days after they enter into a loan application.

Your lender will inform you of whether the interest rate is locked or not, and you can find documentation in the upper right corner of your loan estimate.

Loan estimate graphic

Can My Locked Interest Rate Still Change?

Yes. Lenders are permitted to revise your interest rate if the loan terms changed from application. The most common reason for a rate modification is a low appraisal.

The lender must notify you of the change no less than three business days upon the change. You have the right to cancel the application if you disagree with the rate change.

When shopping for an interest rate, make sure you compare the lenders equally. Ask each lender the interest rate, points, if any, loan term, and the rate lock. Also, be sure to ask any potential lender their position if the interest rate falls out of lock.

Frequently Asked Questions About Rate Locks

Can you change your interest rate after you lock in?

Most lenders will not readjust the interest rate after locking a rate.

How long can you lock in a mortgage rate?

The typical rate lock is 60 days. However, depending on the interest-rate climate, lenders may extend the initial rate lock by 30 to 60 days, for an additional fee.

Lenders will almost always permit rate extension up to 30 days beyond the original lock period — again, for a fee.

How much does a rate lock cost?

Most lenders do not charge a fee for an interest rate lock up to 60 days.

However, some lenders will charge you a rate lock. That’s why you always have to ask the loan officer if the quoted rate is locked rate and for what period of time. A low interest rate with only a 15 day rate lock is likely to expire.

What happens if my interest rate lock expires?

If your interest rate lock expires, and interest rates go up, you'll get the higher interest rate. If the rates went down, your lender will give you the locked rate.

What if mortgage rates drop after I lock?

That's the gamble of a rate lock. If rates go up, you get the locked rate — however, if interest rates go down, you still get the locked rate.

If interest rates decrease significantly, you can always apply to another lender.

When can you lock in a mortgage rate?

Most lenders will lock the interest rate at application — however, there are lenders that will only lock the interest rate just before settlement.

Always ask the loan officer what the company's lock in policy is prior to application. Some lenders will advertise a low interest rate, but not tell you that the interest rate is not guaranteed.

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