A rate lock is a lender's promise to hold your interest rate and points while the loan moves to closing. Without one, your rate can change any day the market moves. With one, the rate holds as long as you close inside the lock period and nothing important on your application changes.
How long a lock lasts
Common lock periods are 30, 45 and 60 days, and longer locks are available at a higher price. Pick a period that runs past the closing date in your purchase contract with a few days of room, because extending a lock usually costs money.
Page 1 of your Loan Estimate shows whether your rate is locked and the date and time the lock ends. It doesn't show what an extension would cost, so ask that question when you lock.
What a lock protects on a $310,000 loan
A buyer locks at a 5.75% rate on a $310,000 loan. Before closing, market rates rise half a point.
| Payment | |
|---|---|
| Principal and interest, locked at 5.75% | $1,809.08 |
| Principal and interest at 6.25% | $1,908.72 |
| Difference each month | $99.64 |
| Difference each year | $1,195.68 |
The lock also protects the approval itself. At FHA's 46.9% housing ratio, a payment $99.64 higher needs about $212 more in gross monthly income. For a buyer approved close to the line, the lock is what keeps the approval at the same numbers all the way to the closing table.
What can change a locked rate
A lock holds the rate for the loan as it was described when you locked. These changes can reprice it:
- Switching loan programs or changing the down payment
- An appraisal below the price, which raises the loan-to-value
- A drop in your credit score before closing
- Income the lender can't verify, such as overtime pay without the paperwork to back it
- Closing after the lock expires
Keep everything steady between lock and closing: no new credit cards, no car loan and no job change without calling us first. That keeps the locked rate and the clear to close on schedule.
Run the payment at your locked rate in the mortgage payment calculator. Once you have a signed contract, call AAA Capital Funding at 888-601-8344 and we'll match the lock period to your closing date.