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Mortgage Lock-ins: Questions to Ask

A quoted rate is only good until it changes. Locking it in, and understanding exactly what that lock does and doesn't guarantee, protects you while your loan is processed.

Lock-ins and fees: what to ask upfront

Before applying, ask each lender: Do they offer a lock-in at all? When can you lock, at application, at approval, or later? Will the lock-in be in writing? Is there a fee, and does it increase for longer lock periods? If rates drop after you lock, can you get the lower rate, and is there an additional fee to do so? Can you float the rate now and lock later if you think rates may fall?

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What is a lock-in, exactly?

A lock-in, or rate lock, is the lender's promise to hold a specific interest rate and number of points for you while your application is processed. It's not the same as a loan commitment, which is the lender's promise to actually make the loan once your application is approved; some commitments include a lock-in, but the two aren't interchangeable. Locking in early protects you from rate increases during processing, but it can also mean you miss out on a rate decrease unless your lender is willing to re-lock at the lower rate.

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Get it in writing

Some lenders use a standard lock-in form; others may only make a verbal promise, which is difficult to prove if a dispute arises later. Request a written lock-in agreement, and read the fine print carefully, some agreements can be voided by unrelated events, such as a change in a government loan program's rate ceiling. If anything is unclear, it's worth having an attorney or real estate professional review the form before you apply.

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Will you be charged for a lock-in?

Many lenders charge a fee to lock in a rate, sometimes upfront and non-refundable if you withdraw your application or are denied, sometimes collected at settlement instead. The fee might be flat, a percentage of the loan, or a fraction of a percentage point added to your locked rate, and it often scales with the length of the lock period.

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The four lock-in options

Locked rate, locked points. The true lock: both figures are fixed regardless of what the market does.

Locked rate, floating points. Your rate is fixed, but points move with the market, potentially costing more (or less) at settlement.

Floating rate, floating points, lockable later. You wait to lock either figure until sometime before settlement, useful if you expect rates to hold steady or fall.

Floating both, with the option to lock points separately. If market points drop after you've locked your rate, ask your lender whether you can lock in the lower points too.

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How long lock-ins last, and what happens if they expire

Lock periods commonly run 30 to 60 days, though some run as short as 7 days after approval or as long as 120 days; longer locks generally cost more. Ask about the lender's typical processing time and current loan volume (heavy volume, often triggered by falling rates, can slow processing and increase the risk your lock expires before closing). If your lock does expire before settlement, most lenders will offer the loan at prevailing terms, which may be higher if rates have risen since you locked. Come prepared with your purchase contract, bank statements, pay stubs or tax returns, and debt information to help keep processing on schedule and reduce the odds of a lapse.

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Understanding your escrow account

Most mortgage payments include an escrow contribution the lender uses to pay your property taxes and hazard insurance as they come due, protecting the lender's collateral in your home. The lender typically collects one-twelfth of your annual tax and insurance bill each month, plus up to two additional months as a cushion under RESPA rules. Compare your escrow payments against your actual annual tax and insurance bills periodically; a shortfall means a lump-sum bill later, while a lender collecting substantially more than required may be violating RESPA. Most lenders send an annual escrow statement; review it, and ask for a refund if it shows they've collected more than they paid out.

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Frequently asked questions

What's the difference between a lock-in and a loan commitment?

A lock-in holds your interest rate and points steady while your application is processed. A loan commitment is the lender's promise to actually fund the loan once approved. Some commitments include a lock-in, but they aren't the same thing.

Should I get a mortgage lock-in in writing?

Yes. A verbal lock-in promise is very difficult to prove if a dispute arises. A written agreement gives you a clear record of the rate, points, and expiration terms.

What happens if my rate lock expires before I close?

Most lenders will offer the loan at the prevailing rate at that time, which may be higher than your locked rate if market rates have risen. Staying responsive to document requests helps reduce the risk of a lapse.

This guide is for general informational purposes only and is not tax, legal, financial, or investment advice. Every business situation is different, so consult a licensed professional before making decisions based on this content.