A rate lock is a commitment from the lender to honor a specific interest rate and points for a set number of days—typically 30, 45, or 60—while your loan moves through underwriting and to closing. If rates rise during that window, you're protected. If they fall, you're generally bound to the locked rate unless you negotiate a float-down provision upfront or pay to re-lock.
When to lock versus float
Most borrowers lock at application or shortly after, especially when rates are volatile or trending up. Floating—delaying the lock—makes sense if you believe rates will drop and you have time to watch the market. The risk: rates can move against you quickly, and once locked, you can't easily unlock without starting over. Locking earlier typically costs nothing extra for a standard 30- or 45-day period, but longer locks—60 or 90 days—often carry an upfront fee, commonly 0.125% to 0.25% of the loan amount per additional 15-day increment. These figures are illustrative; rates and products are subject to change and this is not a commitment to lend.
What happens when a lock expires
If closing doesn't occur before your lock expires, you face three options: extend the lock at the original rate (for a fee), re-lock at the current market rate (which may be higher or lower), or cancel the application. Delays happen—appraisal backlogs, title issues, missing documentation—so it's worth building in a buffer when you choose your lock period.
Extension fees and pricing
Extension fees are typically structured per day or per week. A common range is 0.0125% to 0.025% of the loan amount per day, which translates to roughly 0.09% to 0.175% per week. On a hypothetical 400,000 loan, a seven-day extension might cost 360 to 700. Some lenders offer a one-time courtesy extension of five to ten days at no charge if the delay was outside the borrower's control—an appraisal ordered late by the lender, for example—but policies vary. Extensions are never automatic; you must request one in writing before expiration.
Coordinating your lock with the closing timeline
Work backward from the target closing date. If you're under contract with a 45-day close, a 45-day lock is tight; a 60-day lock offers cushion. For new construction or a purchase without a ratified contract yet, consider floating until you have a firm timeline. For refinances, where you control more variables, a 30- or 45-day lock usually suffices if your documentation is ready.
The Alliance take: lock when you're comfortable with the rate and the timeline is realistic, not when the market looks perfect. Rate locks are about managing risk, not speculation. Discuss your specific transaction and market outlook with your loan officer—they can model scenarios and recommend a lock structure that fits your risk tolerance and schedule. Start an application when you're ready to move forward.