Should I lock or float my mortgage rate?
Locking can protect you from rates rising before you close. Floating leaves room for improvement, but it also keeps market risk open. Here is how to weigh the tradeoff for your own timeline.
A rate lock generally holds the quoted interest rate if you close within the specified period and the application does not change in a way that permits repricing. Locking reduces market-rate uncertainty during that window, but it does not eliminate expiration risk or changes caused by material application updates. The right call depends on your closing timeline and how much uncertainty you can absorb.
How a rate lock works
When you lock, the lender commits to a rate offer for a defined period, commonly tied to your expected closing date. The Consumer Financial Protection Bureau explains that a locked rate generally will not change before closing if you close within the specified timeframe and there are no changes to your application. If closing slips past the window, an extension may be needed and can carry a cost.
Locking reduces market-rate uncertainty. You trade the chance of a lower market rate for protection against a higher one, subject to the written lock terms.
Lock or float: weighing the tradeoff
A lock is usually considered when you are comfortable with the quote, your closing is in sight, and protection from an upward market move matters. Floating only helps if rates fall before you close, and it exposes you to the opposite. For many buyers on a firm timeline, the question is whether certainty matters more than trying to catch a better market move.
I talk this through with every client based on Austin or Texas contract dates, lender lock terms, and risk tolerance rather than a blanket rule. If the question also involves changing companies, review what to check before switching lenders, because a rate lock and appraisal generally do not move automatically.
What if rates drop after I lock
Some programs offer a one-time float-down that may let you pursue a lower rate if the market improves meaningfully after you lock, subject to the lender's terms. Where it is available, I will point it out. If rates fall substantially after you close, a refinance may be worth reviewing.
All locks, float-downs, and loans are subject to program terms, credit approval, and eligibility.
Common questions
Should I lock my mortgage rate or float?
A lock generally holds the quoted rate if you close within the specified period and the application does not change in a way that permits repricing. Floating leaves market risk open, including the possibility that rates rise.
How long does a rate lock last?
Rate locks are commonly offered for 30, 45 or 60 days, and sometimes longer. If closing slips past the lock period, an extension may be available and may cost money.
What should I ask before locking my mortgage rate?
Ask how long the lock lasts, what it costs, what happens if closing is delayed, which application changes can permit repricing, whether an extension costs money, and whether a float-down is available.
What happens if rates drop after I lock?
You generally keep the locked rate unless the lender's written policy offers a float-down or another option. Availability, thresholds, timing and cost vary; a lower market benchmark does not automatically change a locked offer.
Not sure whether to lock?
Tell me your contract dates and I will walk through lock versus float for your file. Watch the market with me on Rate Watch in the meantime.