Homebuyer’s long read
Rate locks: what they protect and what can still change
What a mortgage rate lock does, typical lock periods the CFPB describes, how a locked rate can still change, and how to choose a lock long enough to reach closing.
The interest rate on a mortgage can move between the day you apply and the day you close. A rate lock is the lender's commitment to hold a rate for a set period. It is valuable, but it has conditions, a time limit and sometimes a cost. This chapter explains how the CFPB describes rate locks and how to use one without being caught out at the end.
What a lock does
According to the CFPB, a rate lock means your interest rate will not change between the offer and closing, as long as you close within the specified time frame and there are no changes to your application. Without a lock, the CFPB says, your rate can change at any time; it notes that mortgage rates can change daily, sometimes hourly.
The CFPB says rate locks are typically available for 30, 45 or 60 days, and sometimes longer.
The downsides
The CFPB names two:
- Extensions can be expensive. If your transaction needs more time than the lock allows, extending it may cost money.
- You can be locked out of a lower rate. If rates fall after you lock, you may not benefit.
The CFPB notes that rate lock policies vary by lender. Ask what your lender offers if rates fall, and what it costs, rather than assuming.
How a locked rate can still change
The CFPB is specific that a locked rate can change if your application changes, including your loan amount, credit score or verified income. Examples of the kinds of change it describes:
- you change the kind of loan or the amount of your down payment;
- the appraisal comes in higher or lower than expected;
- your lender cannot document overtime, bonus or other income;
- your credit score changes, for example because you applied for or took out a new loan, or missed a payment.
The practical lesson is to keep your finances stable until closing. Do not open new credit, finance furniture, change jobs without telling your lender, or move large sums without documentation. If you must make a change, ask the lender first how it affects the lock.
The CFPB suggests asking the lender directly: "If I lock my rate, are there any conditions under which my rate could still change?" Ask for the answer in writing.
What the Loan Estimate does and does not tell you
The CFPB notes that your Loan Estimate states whether your rate is locked, but it does not tell you how much it would cost to extend the lock, how much you are paying for the specific lock period, or whether you could pay more or less for a different period. Ask about those details.
When you compare Loan Estimates, make sure they are comparable on this point: a locked rate and an unlocked rate are not the same offer. See compare Loan Estimates side by side.
Choosing the lock period
The CFPB says you should make sure your rate lock agreement is long enough to cover the time until you close, and if you are concerned it is too short, to ask about switching to a longer lock now.
Work backwards from your contract:
- Note the closing date in the purchase contract.
- List what must happen before then: appraisal, underwriting, title work, insurance, and receiving the Closing Disclosure at least three business days before closing.
- Add a margin for delays you cannot control, such as repair negotiations or appraisal scheduling.
- Compare the cost of a longer lock now with the likely cost of an extension later.
A longer lock period may carry a higher rate or fee. Ask the lender to show both options.
When to lock
There is no right moment that anyone can predict, because no one can forecast rates. Many buyers lock once they have a signed purchase contract and have chosen a lender, so the lock period lines up with a real closing date. Locking before you have a contract can mean the lock runs out before you need it. Ask each lender when they allow a lock and whether it requires a property address.
At closing
When the Closing Disclosure arrives, the CFPB suggests checking that the interest rate matches what you expected. If you locked your rate, the CFPB says, your lender is only allowed to change it under limited circumstances. If it has changed, ask why before you sign. See prepare for closing.
A lock log
Keep a short record:
- lender and loan officer;
- date locked and expiry date;
- locked rate and any points or credits;
- cost of the lock and of extensions;
- conditions under which it could change, in the lender's words.
If anything shifts during the process, the log helps you ask precise questions.
Lock terms vary by lender and market. Confirm details with your lender in writing.
Questions to take into the next conversation
- Ask each lender whether the rate on the Loan Estimate is locked and until what date.
- Compare the lock period with your contract's closing date and add a margin for delays.
- Ask what an extension costs per day or per period before you lock.
- Avoid new credit applications and large unexplained deposits until closing.
My rate is locked. Can it still change?
Yes, in some cases. The CFPB explains that a lock holds your rate only if you close within the lock period and there are no changes to your application. Changes such as a different loan amount, credit score or verified income can change the rate even when it is locked. Ask your lender in writing which conditions could change it.