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How long is a mortgage rate lock good for?

During the process of applying for a mortgage, you will be offered a mortgage interest rate. The rate you are offered by a lender will be based on several factors including your credit score, credit history, the type of loan you are applying for, among other factors.

At this time you may “lock-in” the mortgage rate, to ensure that the rate you are quoted is the rate you’ll get at the closing table.
How long can you lock in a mortgage rate?
Most lenders provide rate locks that are good for 30-90 days.
Although locking in an interest rate can save you money, there are some important things to keep in mind. For example, if you lock in your rate too early in the mortgage process and the rates go down, you may not be allowed to "unlock" your rate.
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Read on to learn more about the mortgage rate lock time frame and how far out can you lock in a mortgage rate.

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What is a mortgage rate lock and how does it work?

Locking in a mortgage interest rate is an important step in the mortgage process. Getting the lowest interest rate available could save you hundreds of dollars each month and even thousands of dollars each year.
Doing a rate lock guarantees that you get the interest rate the lender has offered. This is a particularly valuable step at times like these when mortgage interest rates are on the rise. With a rate lock you will be protected from interest rate increases.

How early can you lock in a mortgage rate?

The earliest you can lock in an interest rate is when your mortgage application is received. However, early in the application review process there are loan factors that could change, such as the type of mortgage loan you will qualify for (e.g., conventional, FHA, VA, or jumbo, etc.).
Locking in the rate too soon could result in needing to float-down the rate. Most lenders will charge a fee to do a rate lock. If you lock in the rate and interest rates go down, you will need to “float-down” the rate, for which there will be a fee.

When should you lock in a mortgage rate?

The best time to lock in a mortgage rate may vary, depending on economic factors at the time. Some lenders may let you lock in a rate once your application is received. If it looks like interest rates are coming down, you may want to wait until you’re approved for the mortgage loan. Talk to your lender about their mortgage rate lock timeframe.

Why do mortgage rates change?

Like many things in the financial realm, mortgage rates are affected by national and international economic factors. These include:
  • Economic health. Economic factors affect mortgage interest rates for some of the reasons already discussed. The healthier and more stable the economy is, the lower and more stable interest rates will be.
  • Mortgage supply and demand. After a mortgage loan closes, many loans are packaged by the lender and sold in a secondary market. These bundles of mortgages are known as mortgage-backed securities. The availability and quality of these mortgage backed securities can affect the economy as well as the mortgage interest rates.
  • Bond market. Bond prices and interest rates move in opposite directions. Economic factors can drive bond prices lower, which makes mortgage interest rates rise.
  • Federal funds rate. The federal funds rate is the interest rate at which depository institutions lend reserve balances to other depository institutions overnight on an uncollateralized basis. The Federal Reserve sets this rate, which can affect the interest rate that banks charge their customers.
  • Inflation. To control inflation, the Federal Reserve (often called “the Fed”) will increase interest rates. Although the Fed doesn’t set mortgage rates, the rate of borrowing money increases as a result.

Other factors that can affect your mortgage rate

Credit score. Lenders typically charge higher interest rates when an individual has a low credit score. This is to cover the lender’s risk. Improving your credit score can help you get a lower interest rate on a mortgage and other loans.
Down payment. It’s never too soon to start saving money for a house. If you can make a sizeable down payment, such as 10 or 20%, you could qualify for a lower mortgage interest rate. With a 20% down payment you can also waive Private Mortgage insurance (PMI).
Loan-to-value ratio (LTV). This is a number calculated by dividing the mortgage amount by the property's appraised value. Lenders use this number to determine how much risk they would take on by granting the mortgage loan. The higher the LTV, the more risk the lender is assuming, and the higher the interest rate the borrower will need to pay.
Occupancy. Mortgage interest rates on non-owner-occupied properties tend to be higher than on owner-occupied properties.

How to lock in a mortgage rate

Locking in a mortgage rate is easy. Simply speak to your mortgage lender and get in writing the cost for a rate lock and float-down

Mortgage lock FAQs

What happens if rates go down after I lock my mortgage rate?

Most lenders allow their customers to do a “float-down” for a fee.

What is a float-down mortgage rate lock?

A float-down mortgage rate lock can be requested if the interest rate goes down after you lock your mortgage rate. The lender will charge a fee based on how low you want to float down the rate.

Does the loan type affect the mortgage rate lock?

Some loan types, such as government-backed loans, may not allow rate locks.

Can I lock in my rate longer than 60 days?

Yes, some lenders provide up to 90 days rate lock, but longer periods will come with a cost.

What happens if my mortgage rate lock expires?

If your rate lock expires, you will need to do a “re-lock,” which will usually come with a fee, if the closing is delayed due to the borrower’s situation. However, if the loan does not close on time due to an issue on the lender’s side, the lender may not charge the borrower a fee to extend the lock or re-lock the loan.

How much does it cost to lock in a mortgage rate?

Some lenders may offer the initial lock for free. However, fees could range from
0.25% to 0.50% of the total loan amount. Each lender has unique fees for rate locks and rate lock extensions.

Why Savvy Consumers Choose CU SoCal

For over 60 years CU SoCal has been providing financial services, including car loans, mortgages, Home Equity Loans, HELOCs, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.

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