Mortgage Rate Locks: How Long, What It Costs, Float-Downs

A rate lock is a lender’s promise to hold your interest rate (and points) for a set number of days while your loan is processed. The CFPB says locks are typically available for 30, 45 or 60 days, sometimes longer. Pick a lock long enough to reach closing, because extending a lock that runs out can be expensive.

In NYC this matters more than usual. A co-op purchase needs board approval before you can close, and that timeline is set by the building, not your lender. Here is how to size the lock, what it costs, and what can still change your rate.

How a rate lock works

Until you lock, your rate, points and lender credits can change with the market. The Loan Estimate says so on page 1: “Before closing, your interest rate, points, and lender credits can change unless you lock the interest rate.” Once you lock, the lender must send a revised Loan Estimate within three business days showing the locked terms.

A lock holds as long as two things stay true: you close by the lock expiration date, and your application doesn’t change. Some lenders build the cost of the lock into the rate. Others charge an explicit fee: the CFPB’s model Loan Estimate shows a “Rate Lock Fee” as a line in Section A, Origination Charges. See how to read your Loan Estimate.

What can change a locked rate

The CFPB lists these situations where a locked rate can still change:

• You change the loan type or the down payment amount.
• The appraisal comes in higher or lower than expected, which changes your loan-to-value ratio.
• Your credit score changes, for example after a new loan or a missed payment.
• The lender can’t document overtime, bonus or other income you were counting on.

And of course, the lock simply expires if you don’t close in time. Don’t open new credit cards or finance furniture while your loan is in process.

How long should you lock in NYC?

Count backward from your realistic closing date, not the date in your contract, and add a cushion. The big variables in NYC are the board package for a co-op, the condo’s right of first refusal waiver, and the lender’s own appraisal and underwriting. Our contract to closing timeline explains each stage.

Co-op board packages often ask for the lender’s commitment letter, so the board review may not start until the lender is nearly done, and the board’s meeting schedule adds more time. Ask the managing agent how long approvals have taken recently and how often the board meets. If the answer is vague, a longer lock or a lock you take later in the process may be safer.

Extensions: what they cost

If your closing slips past the lock date, most lenders offer an extension for a fee. The CFPB warns that an extension “may be expensive” and that your Loan Estimate won’t show how much it costs. In a 2018 enforcement action, the CFPB described one large lender that let borrowers extend a lock by, for example, 15 or 30 more days for a fee, and also sold an up-front 90-day lock that was typically cheaper than paying several extension fees.

That case also shows why it matters who caused the delay. The bank’s policy was that the borrower could be charged when the delay was caused by the borrower or certain property issues, and the bank would absorb the fee when it caused the delay. The CFPB found that the bank sometimes charged borrowers fees it should have absorbed. Ask your lender for its extension policy in writing before you lock, including who pays when the lender or appraiser causes the delay.

Worked example (illustrative numbers)

Lenders set their own extension prices. To show the math, assume a lender charges 0.125% of the loan amount for each 15-day extension. Your actual lender’s price may be higher, lower or a flat fee.

Compare that with what a 60- or 90-day lock would have cost upfront. Ask each lender to quote the same loan with different lock periods. The longer lock usually carries a slightly higher rate or more points; whether it’s worth it depends on how likely a delay is in your building.

Float-down options

A float-down is an optional feature some lenders sell that lets you take a lower rate if market rates drop after you lock. Terms vary widely: lenders may charge an upfront fee or price it into the rate, require rates to fall by a minimum amount, and allow it only once or only within a window before closing. Get the terms in writing, including how the new rate is set and the deadline to request it. If a lender doesn’t offer a float-down and rates fall a lot, your options are to stay with the locked rate or switch lenders and start over, which can cost time and fees.

Before you lock: a checklist

1. 1

   Get two or three Loan Estimates on the same day

   Compare the same loan and lock period. Use the mortgage offer comparison calculator.
2. 2

   Decide on points first

   The lock covers rate and points together. See mortgage points and buydowns.
3. 3

   Match the lock to your real timeline

   For a co-op, ask the managing agent about recent approval times. Add a cushion for the appraisal and the board.
4. 4

   Get the lock confirmation in writing

   It should show the rate, points, lock period, expiration date and time, and any lock fee.
5. 5

   Ask about extensions and float-downs

   Price per extension, maximum extensions, who pays for lender-caused delays, and float-down terms if any.
6. 6

   Check the revised Loan Estimate

   It should arrive within three business days of locking and show the locked rate.