Rate Lock: What Does It Mean?

A rate lock is an agreement between a borrower and a lender that guarantees a specific interest rate for a set period of time, typically between 30 and 60 days, while the mortgage is being processed. Because interest rates can fluctuate daily, a rate lock protects you from paying a higher rate if market pricing rises before your loan closes, potentially saving you thousands of dollars over the course of your mortgage. If rates drop after you lock, you generally won't benefit unless your lender offers a float-down option. Rate locks usually expire if your closing is delayed, so it's important to coordinate closely with your lender and real estate agent to stay on schedule. Some lenders charge a fee for longer rate lock periods.