Mortgage interest rates change daily, meaning the mortgage interest rate you see when you first apply for your mortgage preapproval or approval may not be the same rate you end up with at closing. That’s why mortgage rate locks exist. Simply put, a mortgage rate lock freezes your interest rate until the loan closes and protects you from rising rates. What is a mortgage rate lock? A mortgage rate lock is a commitment from a mortgage lender guaranteeing that the interest rate on your home loan will remain ...

Core Insights - Mortgage interest rates fluctuate daily, making it essential for borrowers to lock in rates to protect against increases before closing [1][2] - A mortgage rate lock guarantees that the interest rate remains the same until the loan closes, provided there are no changes to the loan application [2] - The current mortgage rate environment is characterized by unpredictability, with recent decreases attributed to external factors like government shutdowns [7][14] Summary by Sections Mortgage Rate Lock Definition - A mortgage rate lock is a commitment from lenders to maintain the same interest rate until closing, protecting buyers from rising rates [2] Float-Down Options - If rates decrease after locking in, borrowers may be stuck with a higher rate unless they have a float-down option, which typically incurs a fee of 0.5% to 1% of the loan amount [3][20] Timing for Locking Rates - Borrowers can lock in rates after loan approval and up to five days before closing, with some lenders allowing locks during preapproval [4][12] - Market conditions should guide the decision on when to lock; stable rates may not necessitate an early lock, while rising rates warrant immediate action [5][6] Duration of Rate Locks - Rate locks can typically last 30, 45, or 60 days, with fees applicable for extensions if the lock expires before closing [8] Pros and Cons of Rate Locks - Pros include protection from interest rate hikes and easier budgeting due to fixed rates [17] - Cons involve potential missed opportunities for lower rates without a float-down option and possible extension fees [17] Steps to Lock in a Rate - Borrowers should shop around for preapproval from multiple lenders, find a home, and then contact their lender to lock in the desired rate [18] Current Market Conditions - Current mortgage rates are relatively low but unpredictable, influenced by factors like government actions, making it a potentially good time to lock in [14][21] Unique Lender Programs - Some lenders offer unique rate lock programs, such as Newrez's Lock & Shop Program, which allows for a 45-day lock with a relock option if rates drop [23]