Rate Lock Explained: How to Protect Your Mortgage Interest Rate

When you’re buying a home, mortgage rates can feel like a rollercoaster. Rising one day! Then dipping the next... sometimes even shifting by the hour. That’s where a rate lock comes in.

A rate lock is an agreement with your lender that freezes your interest rate for a set time while you finish your home purchase. 

Your lender agrees to hit the pause button on a fast-moving market, giving you the comfort of knowing your rate (and your monthly payment) won’t suddenly jump before closing.

In this article, we’ll break down what a rate lock is, how it works, and why it can be a game-changer for homebuyers.

What Is a Rate Lock?

A rate lock is a guarantee from your lender that your interest rate won’t change for a certain amount of time, usually 30, 45, or 60 days. Some lenders offer longer lock periods for an added cost.

Example: If you lock your rate at 6.25% for 45 days, even if rates rise to 6.75% during that time, you’ll still get the lower 6.25% rate as long as you close within the lock period.

Imagine shopping at the store and seeing the price of eggs change every day. A rate lock is like putting those eggs in your cart and the store promising to honor today’s price at checkout, even if it goes up tomorrow.

How Do You Get a Rate Lock?

You get a rate lock by asking your lender once you’ve been pre-approved or are under contract for a home. The lender will tell you the available lock periods (often 30–60 days) and any fees involved. Typically, you confirm the lock in writing, and from that moment your interest rate is guaranteed for the agreed period.

Why Rate Locks Matter

• Protection from Rising Rates: If market rates increase, your locked rate stays the same.

• Peace of Mind: You know exactly what your monthly payment will be.

• Budget Confidence: Helps you plan with certainty during the buying process.

What happens if you don’t lock? If rates rise while you’re waiting to close, your monthly payment could end up hundreds of dollars higher than expected. This can throw off your budget and even make you no longer qualify for the loan.

How Long Can You Lock a Rate?

Typical lock periods range from 30 to 60 days, but some lenders allow 90 days or more. The longer the lock, the more it may cost. Costs can come as a flat fee, a small increase in closing costs, or sometimes a slightly higher interest rate. If your lock expires before closing, you may need to extend it for an additional fee.

When Should You Lock Your Rate?

The best time to lock your rate is once you’ve chosen a home and have a signed purchase agreement. Locking too early can be risky if your closing gets delayed, while waiting too long leaves you exposed to rising rates. Your lender can help you pick the right timing.

Can Rates Go Lower After You Lock?

Yes. If market rates fall, you could end up with a higher rate than what’s currently available. Some lenders offer a “float-down” option, which lets you take advantage of a lower rate if one becomes available during your lock period. Ask your lender if this feature is available.

Real-Life Example

• Loan: $300,000, 30-year fixed mortgage.

• Locked rate: 6.25% = monthly payment ≈ $1,847.

• If rates rose to 6.75% before closing: monthly payment ≈ $1,946.

• Difference: $99/month, which adds up to over $35,000 across 30 years.

This shows how valuable a rate lock can be for protecting your budget.

Pros and Cons of a Rate Lock

Pros	Cons
Protects you from rising rates	May cost extra for longer lock periods
Gives peace of mind and budget certainty	If rates fall, you might miss out unless you have a float-down option
Simplifies planning during the buying process	Lock can expire before closing, requiring an extension fee

Rate Lock Explained: Summary & Final Thoughts

A rate lock is one of the simplest and smartest tools buyers can use to protect themselves from rising interest rates. It shields you from sudden spikes, gives you a clear idea of your future monthly payments, and brings peace of mind in a changing market. While it may not always guarantee the absolute lowest rate, it offers security, predictability, and confidence when making one of the biggest financial decisions of your life.

Always ask your lender about rate lock options, including length, costs, and whether a float-down is available. Have them explain what a rate lock means to them! As Wisconsin’s housing expert, I can help you understand your options, work with trusted lenders, and make sure your mortgage terms support your long-term goals.