Somewhere in your loan process, someone will ask whether you want to lock. It is worth understanding what you are being asked before you answer.
What a lock actually is
A rate lock is an agreement that your rate will not change for a defined period, regardless of what happens in the market.
It protects you if rates rise. It also binds you if they fall. That is the trade, and it is the whole decision in one sentence.
Locks are tied to a specific loan, a specific property, and a specific timeframe. If any of those change materially, the lock may need to be revisited.
Lock periods and what they cost
Locks come in durations. Thirty days, forty-five, sixty, sometimes longer.
Longer locks generally price less favorably than shorter ones. A lender holding a rate for you for sixty days is carrying more risk than one holding it for thirty, and that risk shows up in pricing.
So there is a real cost to locking longer than you need. There is also a real cost to locking shorter than your closing requires, because then you are looking at an extension.
What happens if your closing slips
This is the scenario worth planning for.
If your lock expires before you close, you generally have two options. Extend it, usually for a fee. Or let it expire and take whatever the market offers, which may be better or worse than what you had.
Extension costs vary by lender and by how much additional time you need.
The way to avoid this is to lock for a period that reflects your actual timeline rather than an optimistic one. If your contract has a sixty-day closing and your appraisal has not been scheduled yet, a thirty-day lock is asking for trouble.
Float-downs
Some lenders offer a float-down, which lets you capture a lower rate if the market improves meaningfully after you lock.
The details matter enormously and vary by lender. There is often a cost. There is usually a threshold the market has to cross before the option is available, and it typically can only be exercised once, within a specific window.
If a float-down is offered to you, ask exactly what triggers it, what it costs, and when it can be used. The answers differ.
How to think about the decision
We will not tell you where rates are heading. Nobody knows, and anyone who says otherwise is guessing with your money.
What we will tell you is how to frame it. Ask yourself what happens if rates move against you. If a meaningful increase would put your payment somewhere you are not comfortable, lock. Certainty is worth more than optimization when your budget is tight.
If you have room in your budget and the timeline is short, floating carries less consequence.
Most buyers under contract in a competitive market lock relatively early, because the downside of an unaffordable payment outweighs the upside of a slightly better one.
Ask these questions
Before you lock, know your lock period and expiration date, what an extension costs, whether a float-down is available and on what terms, and what happens if your closing date moves.
We walk clients through all of it before the decision, not after. If you are under contract and unsure, call and we will talk it through.
Trinity Lending Company | NMLS #2762052 | Equal Housing Opportunity