Why locking your mortgage rate won’t box you in

Lucy Randall, a non-commissioned Loan Consultant at Better, explains how locking a mortgage rate works.

If you’re applying for a mortgage or refinancing a current loan, one of the steps you’ll take is “locking” your rate. While that may seem final, the truth is you’ll still have flexibility when it comes to your loan, even after you’ve locked.

What is a rate lock and why should you do it?

Interest rates can fluctuate daily based on how the market is doing (learn more about how rates work here). Locking your rate protects you from these fluctuations going forward. When you lock your rate, your lender will commit to honor that day’s rate options, even if rates go up later.

When can you lock your rate?

Locking your rate is the first step to starting the loan process. You can lock your rate once you’ve given us some basic information about your property, income, and authorized a hard credit pull. If you’re buying a home, you’ll also need a signed purchase contract for your new property.

Once you lock your rate, you’ll still have flexibility.

The idea of “locking” may seem limiting, but you’re not actually handcuffed to one final option. In fact, you’ll still be able to:

  • Select a different type of loan. When you lock, you’re essentially requesting that we hold all of the rates available to you across all of our products for that day. So for example, if you later decide to change from a fixed-rate to an adjustable-rate mortgage, we’ll honor the original day’s rates for whichever loan type you choose.

  • Change your mind on taking credits vs paying points. When you lock your rate, you’re also locking all of the points and credit options associated with that rate. So for example, if you decide later on that you want to pay more points up front for a lower rate, we’ll do that math based on the original rate you locked.

  • Make changes to your application, like changing your loan amount or adding a co-borrower (keep in mind that actions like these may change your rate options, but they’ll still be based on the day you locked your rate).

  • Take advantage of market changes. If rates fall by 0.25% (like from 4.125 to 3.875), we’ll honor the lower rate. This is sometimes called a “float down” option.

Have questions about rates, pricing, or your mortgage options in general?