A lock-in or rate lock on a mortgage loan means that your interest rate won’t change between the offer and closing, as long as you close within the specified time frame and there are no changes to your application. And, a rate lock may lock you out of a lower interest rate if rates fall after you get your loan offer.

Should I wait to lock in mortgage rate?

As long as you close before your rate lock expires, any increase in rates won’t affect you. The ideal time to lock your mortgage rate is when interest rates are at their lowest, but this is hard to predict — even for the experts. It’s worth noting that interest rates could decrease during your lock period.

What happens if you don’t lock in your mortgage rate?

If you don’t lock in your interest rate, rising interest rates could force you to make a higher down payment or pay points on your closing agreement. When you pay an up-front fee—or mortgage points—to a lender, you’re providing more money initially in order to get a lower interest rate.

Can I change lenders after locking?

Yes, you can change lenders after locking a rate. But you’ll have to start the application process over with your new lender. That means getting pre-approved, submitting all your documents, and waiting for underwriting — twice. All in all, closing a mortgage or refinance usually takes more than a month.

Should I lock or float?

A “float down” option is actually the best of both worlds: you can lock in the current rate, but if the market changes and rates drop even further, the lender will provide you with an even lower rate. Borrowers can vet lenders with different loan rate lock features on Credible.

Can you cancel after locking rate?

After you lock in a rate with a lender, you may cancel the transaction altogether and go with another lender who offers a better rate. Switching lenders after a rate-lock is generally frowned-upon by lenders, as it wastes the lender’s time and resources; however, the practice is legal.

What happens when you lock in a mortgage rate?

This option means you’ll lock in at the agreed upon rate, but should interest rates drop within the period, you’ll be closing at the lower rate. Both lender and borrower will have to agree to the terms of the float-down option, including how long it will last and how much the interest rates have to drop to be enforced.

Is it legal to change lender after locking rate?

Yes, you can change lenders even after locking a rate. It’s legal and doesn’t carry a specific fee or penalty. Sometimes borrowers choose to switch lenders in the middle of the transaction.

What happens if the mortgage rate goes down?

If rates go down, you have the right to lock again at a lower rate. Rates generally have to be a quarter- to a half-percentage point better than your locked rate to get a float down.

Why is it important to get a rate lock?

Since interest rates can change from day to day, it is very important to get a rate lock when shopping for a home if you want to count on a particular rate. Getting the best interest rate possible can save you thousands of dollars over the term of the mortgage.