Mortgage Lock

A mortgage lock, aka lock-in-period, is a period of time where the interest rate you’ve been offered on your mortgage won’t change between the offer and closing on the property.

Mortgage Lock definition and examples

Mortgage rates can fluctuate daily, so as long as you have a lock-in on your mortgage you can be guaranteed you’ll get the interest rate you were offered, and as long as you close within the allotted time frame and there are no changes to the application of the loan during the closing period. Mortgage locks can be available for 30, 45 or 60 days. 

For example, your lender might lock in your interest rate at 3.75 percent for 45 days. If your rates jump 5% during that period, you’ll still be offered 3.75 percent. 

Btw – the different lock periods will impact the discount points and rate based on the length of time.

How much is a mortgage lock?

Mortgage locks aren’t free, but you won’t necessarily see a formal charge for it. You’ll usually be offered a rate with the mortgage lock cost already included. You might however be charged extra if you want to extend the time of your lock but this is something you should ask about from the outset. 

If you want to check whether you have a locked-in mortgage rate, or for how long for, check the first page of your loan estimate

When comparing banks, in addition to interest rate, you should look at bank fees such as commissions, underwriting fees, processing fees, etc. (anything under ‘section A. Origination charges’) 

These will be different bank to bank, as title, appraisal, tax certificate fees, etc. will be the same no matter which lender is chosen.

Even if you secured a mortgage lock, it can still change if you made any changes to your application. For example, if you decided to change the type of loan, or downpayment. 

Pro’s and Con’s of a mortgage lock

There’s always some risk when you take a mortgage lock. For instance, if the interest rates dipped during the time, the borrower wouldn’t be able to take advantage of it, similarly if the interest rates go up, the lender can’t take advantage. Also, once your rate is locked in, your lender will be more willing to move things and help you close – which could prove helpful in a tight closing window. 

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