What Is Rate Lock?
A rate lock is a lender's commitment to hold a specific interest rate for a set period while a loan is processed, protecting the borrower from rate increases before closing.
Rate Lock in plain English
A rate lock is a lender's promise to hold your interest rate (and points) for a set period while your loan is processed, as long as your application does not change and you close before the lock expires.
Common lock periods are 30, 45 or 60 days. Longer locks can cost more, and extending a lock that runs out can be expensive.
Example
A buyer locks 6.75% on a $400,000 loan, a $2,594 monthly payment. If market rates rise a quarter point to 7.00% before closing, the same loan would cost $2,661, so the lock protects about $67 a month.
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The home-buying timeline, step by step
A typical financed U.S. purchase. Open a step to see what happens, the money involved and the usual timing. Your contract sets the real deadlines.
A lender reviews your credit, income and assets and states how much it is prepared to lend.
Timing: Before you search; letters are often valid for about 60 to 90 days.
Terms: pre approval, dti, credit score
You compare homes against your budget, including taxes, insurance and HOA dues - not just the price.
Timing: As long as it takes.
Terms: piti, comparable sales
You propose a price, contingencies, deadlines and any seller concessions; the seller accepts, counters or rejects.
Timing: Responses usually come within a day or two.
Terms: counteroffer, contingency, seller concession
Both sides sign the purchase contract, which sets every deadline that follows.
Timing: Day 0 of the contract.
Terms: under contract, contingency
You pay the good-faith deposit to the neutral holder named in the contract.
Money: Often about 1% to 3% of the price, by local custom.
Timing: Usually within a few business days of signing.
Terms: earnest money, escrow
A home inspector checks the condition; you can negotiate repairs or credits, or cancel within the inspection contingency.
Money: Inspection fees are paid up front.
Timing: Commonly 7 to 14 days after signing.
The lender's appraiser estimates value. A low appraisal can create a gap you must cover or renegotiate.
Money: The appraisal fee is often paid at application.
Timing: Commonly 2 to 3 weeks after signing.
Terms: appraisal, appraisal gap, appraisal contingency
The lender verifies everything and issues conditions, then "clear to close". Avoid new debt or large unexplained deposits.
Timing: Runs in parallel with the steps above.
Terms: underwriting, clear to close, rate lock
You confirm the home is in the agreed condition and any repairs are done.
Timing: Usually within a day or two of closing.
Terms: final walkthrough
You sign the loan and transfer documents and pay cash to close; you receive the keys. The Closing Disclosure arrives at least three business days before.
Money: Cash to close is due, usually by wire.
Timing: Commonly 30 to 45 days after signing for a financed purchase.
Terms: closing, cash to close, closing disclosure
Timing ranges are common practice, not rules. Cash purchases can close in one to two weeks.
Why it matters
A lock protects you if rates rise before closing, but you usually do not benefit if they fall. A locked rate can still change if your loan amount, credit score, income or appraised value changes.
What it means for you
What buyers should know
Match the lock length to the contract's closing date plus a small buffer.
Common mistakes
- Choosing a lock period shorter than the realistic time to close.
- Changing the loan amount or loan type after locking.
- Not asking what an extension costs before locking.
Compare and common questions
Rate Lock: frequently asked questions
When should I lock my mortgage rate?
Usually once you have an accepted offer and a lock period long enough to close. Locking earlier risks expiry; waiting risks rates rising.
What happens if my rate lock expires?
The lender may offer an extension for a fee or reprice the loan at current rates. Ask in advance what your lender does.
Can a locked rate change?
Yes, if something in your application changes - the loan amount, credit score, verified income or appraisal value.
Go deeper
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Where it fits
- Buying a home, Underwriting: before this, Compensating Factors; next, Private Mortgage Insurance.
More Financing Terms
Recommended next step
Weigh the cost of a longer lock against the risk of rates rising.
Mortgage rate lock calculator →Sources and review
- What's a lock-in or a rate lock on a mortgage?, Consumer Financial Protection Bureau. Supports: How rate locks work, common lock periods, expiry and changes to a locked rate.
Where this applies: United States. Federal disclosure and servicing rules (TILA/Regulation Z, RESPA/Regulation X) apply nationwide; loan-program rules come from Fannie Mae, Freddie Mac, FHA, VA, USDA or the lender.
Last reviewed: · Updated:
Examples use illustrative figures; rules of thumb are labelled as such. Rates, limits and program rules change - confirm current figures with your lender or a qualified professional.
This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.
Related Questions
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