How Long Should I Lock My Rate, and Why Does It Matter?

Think locking a rate is overrated? Think again. Locking a rate is the best way to protect yourself against fluctuations in interest rates. But what if your lock expires and you haven’t closed yet? Here’s what you need to know. 

Rate Locking 101

Locking a rate effectively freezes the interest rate for a typical time period of 30, 45 or 60 days. Your lender might try and charge a fee to lock your rate. You can try to negotiate this for a basic rate lock. Be prepared to hand over a credit card to charge your appraisal, though. You might be able to get a longer rate lock but it will come at a premium and may not be worth the added cost.

Rate lock extensions

If you haven’t closed yet, and your lock is expiring, you want to protect yourself in case the interest rate spikes. You can usually extend your lock for a fee which varies by program. Some lenders will extend the lock at no additional charge if the closing has been delayed by the lender. If rates are going up, and you want to extend your lock, you’ll have to pay a fractional point increase, which usually looks something like this:

• 7 days = .125 Pts
• 15 days = .250 Pts
• 30 days = .500 Pts

If the interest rate drops significantly after you lock, you may be eligible for a one-time renegotiation to lower your rate to somewhere between what it was when you locked, and where it fell to.

Best plan for locking your rate

Try to lay out your plan sensibly, where you rate lock expires after your assumed closing date, that way you have a little leeway in case of a delay.