Mortgage interest rates can vary swiftly. They can increase and often decrease regularly or even hourly. However, it may influence the amount of your payment when you refinance your mortgage. In this condition, a mortgage rate lock saves you from expensive diversion and suspends your interest rate until you have closed your mortgage.

Everyone wants the least interest rate on their mortgage while buying a home. Thus, unfortunately, even a slight increase in interest rate can increase your payments over your mortgage.

Luckily, there is a way to avoid all these concerns of rate variations; here’s when you need to lock your mortgage rate. But what is a mortgage rate lock, and how it works?

Let’s explore the term and everything about the mortgage rate lock.

What is Mortgage Rate Lock?

A mortgage rate lock is a contract between the creditor and the debtor, which enables the borrower to lock his interest rate. In other words, if you borrow an amount from your lender and the interest rate somehow fluctuates, you would pay the same interest rate until closing regardless of market evolution.

Mortgage rates change very frequently, either on a daily or hourly basis. On account of this, the interest rate decided between you and your lender on the first day will be applied even after the variation of the mortgage rate, only when you have locked your mortgage rate.

The rate lock provides a safeguard not to pay an increased cost each month. However, with this agreement, you can pay your mortgage installments peacefully until their completion.

A rate lock saves you from paying higher interest rates, but you won’t get a lesser rate except you have adopted the flow-down option for one time.

You must keep in mind if you lock your interest rate, and the rate has gone down, it would be unprofitable for you because the market rate would be lower; you would have to pay the same interest rate as in the agreement, which is higher. Nevertheless, there is an option included in your rate lock, which is known as the float-down option; it permits the benefit of the decreased interest rate during your lock period.

When do you Need to Lock your Mortgage Rate?

Once you have borrowed an amount from your lender and you believe that the agreed interest rate is the perfect rate for you and can you afford it, it is better to lock this rate right at the moment.

In case you are anticipating waiting for the rates to go down and get lower interest rates, you don’t lock your rates. However, the risks are more of the rise in mortgage rates; then, it would be a notable drawback for you.

Thus, you can check your mortgage rates regularly, and you should get ready to take an instant move. For instance, if you check the market interest rate daily and believe that the rates are about to rise, you can quickly lock your mortgage rate to save from paying an additional amount.

Bear in mind that no one can presume whether the rates would go higher or down. They can move from a few points, so the best way is to lock the mortgage rate from the starting day.

Steps to Lock your Mortgage Rate

Once you have identified when you need to lock your mortgage rate, you can effortlessly execute the process of locking process by following specific steps:

    • You should ask about the interval from your lender. He can describe to you when it is possible to lock your rates. Generally, the best time is when you submit your application.
    • Ask whether the debtor charges a fee over rate lock agreement or extend the lock if required. You should also ask if the fee is refundable once you have canceled this contract.
    • Typically, when you sign the lock rate agreement, the closing date is set at that time. Thus, you must understand the lock time outline. You should extend your timeline until you have completed your installments.
    • Observing your mortgage rates gives you notions of where rates are going on. You can consult your loan agent or officers to remain informed about the present mortgage rates and their variations; then, you decide.
    • Now, this is the time to ask your lender for a rate lock. You can contact your debtor and provide him with a timeframe.
    • Once you have locked your interest rates, you should review your new loan estimate, which should represent that your interest rate won’t fluctuate until your contract expires.

How Mortgage Rate Lock Works?

An ideal way to know about how mortgage rate lock works are by considering several scenarios on interest rate variation. Three main scenarios occur once you have locked your mortgage rates.

Mortgage Rates Stay Same

Generally, mortgage rates vary from time to time, but there is also a probability that these rates do not fluctuate and stay the same for weeks. In such circumstances, you pay the exact amount from where you initiated, and the mortgage rate lock has to do nothing in this situation.

Mortgage Rates Rise

This is the primary reason; you should go for a mortgage rate lock. This is the possible scenario for which you need to be protected from paying an additional amount. Once you have locked your interest rates, the rise in mortgage rates won’t affect your payments.

Mortgage Rates Fall

This scenario is the least possible, and mortgage rates go down occasionally. However, in this case, you can have a float-down option on your lock, which allows you to use this option to grasp the current lower interest rates for your payments.


Locking down your mortgage rate can provide you peace of mind and aids you plan your monthly installments affordably. Make sure to be aware of the current mortgage rates in the market and make instant decisions to remain protected from expensive interest rates.

Remember, a locked rate can vary in some instances, in case your credit score changes, you become unemployed, or your home evaluation doesn’t match your mortgage amount; your interest rates can become higher or lower depending upon these aspects.