How Do Mortgage Rate Locks Work? (And When To Float)

Lock, lock! Who’s there? It’s your mortgage
rate, and I’m on the rise! OK, so we’re not comedians here, but if you’re shopping for
a mortgage, you’ve probably heard how mortgage rates have started to go up after months near
record lows. And, you’ve probably also heard that to get the best deal possible, you need
to lock in your rate NOW. But what does locking in a rate really mean? Well, it’s actually
pretty simple — if you’re like most mortgage hunters, when you apply for a loan, probably
one of the biggest reasons you’re applying for it is because it has a low interest rate,
right? The problem is, interest rates are fickle — they can change pretty quickly,
like in a week or even less. On the other hand, the loan approval process can take several
weeks. Who knows where mortgage rates will be by then? A lock guarantees that the loan
terms that were in effect when you applied will still be valid once your loan is approved.
They’re “locked in.” Of course, if rates go down before your loan is approved, you may
want the option of adjusting the rate downward. In that case, you want to look for a lock
that lets you “float” your rate. Sometimes, you can lock in your points, too. Wanna learn
more? Click the link below to read all about the fascinating world of rate locks and how
they can save you big bucks.

14 thoughts on “How Do Mortgage Rate Locks Work? (And When To Float)

  • If you agree to a mortgage rate lock, what happens of rates go down when it comes time to close? I just want to make sure I understand.

  • @Albert! Great question… If you agree to a mortgage rate lock you can still back out but you will tarnish your relationship with the broker or lender, and likely surrender your appraisal fee investment. A rate lock does force you to close on a loan, but if you decide to back out an entirely new loan will have to be under-written. Ideally, you want to avoid rescinding from any loan at all costs. Hope that helps!

  • This is so fake. This Woman is simply a robot of Bank Rate Monitor which only advertises those who pay Bank Rate Monitor. Those who pay Bank Rate the most get the best placement. Bank Rate Monitor does a real bad job making sure the Banks and other lenders actually have the rates they post, bait and switch tactics with the worst of them. You need a Professional to get you approved in this over regulated market even if you have the best credit. Banks have a 40% decline rate on mortgages

  • Hello Rod, that could not be further from the truth. The woman in the video is on our team at and has been hired to assist us in educating homeowners on how the mortgage process works, including: rate locks, points, GFE's, etc… Our site AND VIDEOS are an educational resource for current and prospecitve homeowners and we do NOT make a dime from Bank Rate for this video. Sorry that you don't like Bank Rate but rest assured our #1 goal is helping borrowers get educated. Amen to that.

  • Hello Rod, it does not always go to bank rate. Only in parts of the country where we do not have a trusted LO or brokerage we can refer the business to. We can't leave the page blank just because we don't offer services in those areas. If you don't like Bank Rate that that's ok, but people must find lenders somehow and all forms of advertising are competitive. Nobody offers free advertising on the web. To continue offering free videos, articles, & education we must get compensated somehow.

  • With the way interest rates seem to be rising, at least at this point in time, I would say it makes good sense to lock sooner rather than later.

  • Okay I think I understand this whole lock concept. It really does make sense if you are in an environment of rising rates like we are now.

  • Absolutely Joleene, the minute you find a lender you can trust, and the lender quotes you terms you are happy with you should definitey lock in your rate to avoid any increases. With interest rates going up from here, the sooner you lock the better. For example, this past week alone, "Best Execution" or average rates jumped from 4.5% all the way up to 4.75% for most lending institutions. It may not seem like a lot but it makes a huge difference over 30 years. You are talking TENS OF THOUSAND$!

  • Personally I would lean towards locking in a good rate as early as possible while they are at a low, especially in a market with increasing mortgage rates. It's just not worth the risk of a budget problem that even a small increase can cause.

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