When Should You Lock In Your Mortgage Rate? Rate Locks Explained

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Happy Valentine's Day — and today's topic

Welcome to Mortgage Mom Radio. I'm Debbie Marcoux, the Mortgage Mom — and it's a good day: the camera's working, the sound is working, and I want to wish everybody a very Happy Valentine's Day, including my Go Country listeners catching the show Saturday morning.

Today we're talking rate locks. Should you lock in your rate? What does locking even mean? What happens if you're locked and rates get better — or you're not locked and rates go up? Is right now a time I'd suggest locking? And can you lock before you even have a property address, for the buyer out there actively making offers? We're covering all of it, and this is an interactive show — put any question in the feed and I'll read it out loud and answer it.

The backdrop: “higher for longer,” and where we stand

Some context first. Two years ago the Federal Reserve told us they'd keep raising rates until inflation started coming down, then hold — “higher for longer,” with no actual time frame attached. Rates started easing in December on favorable news, and again in January when the inflation numbers looked better, and people got excited about cuts at the next Fed meeting. I have no crystal ball — nobody does — but I said on this show back around July of last year that I didn't expect rate cuts until July at the earliest, more likely the fourth quarter of 2024. That is still my opinion.

And here's why the topic matters today: we just got an inflation report yesterday showing inflation up from the month before, people are panicking a little, and rates popped back up. The good news: we're still down significantly from the highs of October, and I don't think we'll see those highs again — at least not between 2024 and 2025. Back in October rates were literally in the 8% range; I was quoting as high as about 8.5%. Now we're in the low sevens on conventional, and the government products — FHA and VA — are in the mid-to-low sixes, which is phenomenal. It's making homes more affordable, opening up price ranges, and bringing some refinances back into play: if you added a home equity line or loan on top of a low first-mortgage rate, your blended rate is probably sitting around 5–5.5%, and we're getting close to where consolidating could soon make sense.

But we are volatile. One day the news is spectacular and rates swing down fast; the next day a report like yesterday's lands and we jump roughly a quarter point. The rate quoted at your pre-approval can be different by the time you're ready to lock — for better or for worse. Which is exactly why you need to understand rate locks.

What a rate lock is

When you start a mortgage application — purchase or refinance — your loan officer prices your particular scenario off a rate sheet. Everybody gets a different rate; you'll never hear me throw a number out in a commercial, because your rate depends on what you're buying or refinancing, the down payment, whether it's a single family, condo, or 2–4 units, whether it's your primary residence, vacation home, or an investment, your debt-to-income ratio, and your credit score. All of it goes into your quote.

Once you have the property address — on a purchase, your offer is accepted and escrow is opening; on a refinance, you've decided which property you're financing — you have the opportunity to lock that rate. Locking means: I'm happy with this rate and this payment. I don't want to lose it. If rates go down further, fine — I just don't want it to go up. We push the button, and you are locked. If rates rise: you're locked at the quoted rate. If rates fall: you're locked at the quoted rate. Both directions. Your rate is set by the rate sheet in force at the time and date the button is pushed, for the rest of your transaction.

Choosing the lock term

You choose a time frame: the standard offerings are 30, 60, or 90 days, some banks go longer, and there's also a 15-day lock. The longer the lock, the slightly higher the rate — so the 15-day gives you the best pricing, and 30 beats 60 beats 90.

Why take a longer one? Because the lock has to reach your closing. Maybe the seller needs 60 or 70 days before they can move; maybe you're buying a new build that delivers in 60–90 days — you lock to match. And the 15-day is for the sprint: say the only way to get the offer accepted was a quick close — today's February 14th, and the seller doesn't want to make another mortgage payment, so the goal is closing by the end of the month. Two weeks — the 15-day lock fits, with a bit better pricing than the 30.

The point: make sure you're locked for the right amount of time. A typical purchase contract is written for a 30-day close, and until your loan officer sees the contract, that's what they'll assume — so if you negotiated a 45- or 60-day escrow, say so. A 30-day lock on a 45-day escrow is a problem; that deal needs the 60.

Rate sheets, reprices, and who controls them

Understand where quotes come from. Rate sheets for mortgages come out once a day — sometimes twice, sometimes three times. In my 30 years I have seen four rate sheets in one day exactly once, but it can happen. When the market is sliding hard one way or the other, lenders reprice: we get a notification — reprice for the worse, or improving prices — and there's a brand-new sheet to work from.

Your loan officer has absolutely no control over any of that. Not over when a new sheet drops, not over getting you into last hour's pricing. I want you to hear that clearly: every loan officer in this country has zero control over rate sheets. What a good one does control is communication — telling you what's happening, what's driving rates, and what's on tomorrow's calendar.

And nobody — no loan officer, not even a financial adviser — can honestly tell you what rates will do across your 30-day escrow. The best anyone can offer is a view a day or two out: “we got some basis points back this morning, so I'd expect tomorrow's sheet to look similar.” If you want to float a day, float a day — and reconnect tomorrow, and the next day. It's a day-by-day decision. Anyone who says “you've got 30 days, rates are generally heading down, just float until the end and don't worry about it” — that is not a good idea, period, end of story. You check in every day, you know what data is being released — unemployment reports, CPI, the Fed speaking — and you decide, each day, lock or float.

So are you a gambler? Are you the one at the craps table letting your winnings ride, or do you take the win and walk? That's genuinely the decision. Ask your loan officer the two questions that matter: if the rate improved an eighth or a quarter after I locked, how much payment did I give up? And if I float and it goes the other way an eighth or a quarter, where's my payment then? When the payment makes sense and you'd hate to lose it — lock. It's 100% your choice, and it should be an informed one.

Lock-and-shop: locking before you have an address

Can you lock while you're still shopping, before you've committed to a home? There are lock-and-shop programs that hold a rate for an extended period — three, five, six months, sometimes longer — but they cost non-refundable money up front for that security blanket. Do I suggest one in today's market? I don't. The time for those was mid-2022 into early 2023, when the Fed was telling us plainly that rates were going up and up until inflation broke — I talked about them then, and I wish more people had taken me up on it. I don't believe we're facing that kind of runaway move now, so I wouldn't pay for the protection today. But the option exists, and you can always ask.

Q&A: what time do rates come out?

Michelle asks: “What time of day does the interest rate come out, and does it stay the same for the whole day?”

Great question. Typically about 7 a.m. Pacific for the first sheets of the day — though every lender has its own set release time. And no, it doesn't necessarily hold all day; a lender can reprice as many times as it sees fit when the market moves.

Here's how it works on our side. We're a mortgage bank — not a retail bank with checking and savings accounts, but a lender with lines of credit across many investors, including some of the biggest names in the business. That means we can place your loan wherever your scenario fits best — and each of those investors publishes its own rate sheet on its own schedule, repricing on its own clock. Which brings me back to communication: your loan officer should be telling you the day before, “tomorrow there's an unemployment report; we're expecting rates to improve — but if it comes out not as expected, they'll typically reverse.” You know the report is coming, you know it can move rates either way, and you make the call: lock ahead of it, or gamble and wait. If your loan officer never has that conversation, you're at work, living your life, with no clue you just lost an eighth or a quarter on a rate you were never actually locked into.

Check your paperwork: locked or floating?

Many clients don't even know their rate isn't locked — because many loan officers never explain that it's the borrower's choice. The disclosures you sign at the start of the transaction will tell you. On your Loan Estimate there's a line: rate locked — yes or no, with the date you're locked through. Look at it. If they locked you for 30 days but you agreed to a 45-day escrow, your lock doesn't reach your closing — that's a problem you want caught early, not at the closing table. Floating means you move with the market: rates get better, you get better; rates get worse, you get worse. Fine — as long as you chose it.

If you miss your lock: extensions

What happens if you lock for 15 or 30 or 90 days and the closing slips — a loan hiccup, a new build that isn't ready, a seller who needs another week or two? Your lock is due to expire March 1st and you now need until the 5th, or the 10th. There is a cost to extend: figure about 0.02% of your loan amount per day — on a $500,000 loan, roughly $100 a day. That adds up fast across a lot of days, which is again why we lock for the right term in the first place. Extended locks for new construction — nine, ten months out — exist too, at an upfront cost; ask about them if you're buying a build.

And no — when a lock expires you do not go back to the drawing board at that day's pricing. Think about why: if rates rose since you locked, you'd be thrown back to a worse market; and if rates fell, the lock desk isn't letting you expire your way into a free better rate. Either way, the answer is the same: you extend the lock out until the loan funds and closes.

Rate renegotiation on a big drop

One exception worth knowing: if there's a huge drop in the market during your lock — and I mean a significant one, really about three-eighths of a percent or more, not an eighth or a quarter — most institutions' lock desks will do a rate renegotiation. We do it at ours. We're not going to make you close at something far above the market at closing time; the renegotiation makes you whole. That's fairly standard across the industry, though each lender writes its own lock and pricing policies. But it takes a big move — don't count on it for the small stuff.

Wrap-up

That's everything about locking in your interest rate: you are the boss, you choose when to lock — not the loan officer — and if you float, make sure they're communicating with you daily. One housekeeping note: I'm retiring the weekly text alerts in a couple of weeks, so to know when I go live, subscribe to the Mortgage Mom Radio YouTube channel and click the notification bell — and give the show a thumbs up if it helped; it genuinely matters for getting these videos in front of more people. The office is still one call or text away at 844-935-3634 — 844-WE-LEND-4. I'll be here again next Wednesday at 1 p.m. Pacific. Enjoy Presidents' Day on Monday, Happy Valentine's Day, and I'll talk to you all real soon.