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Mortgage Definitions: Rate Lock

A mortgage rate lock is a mortgage lender’s commitment to honor a specific interest rate for a specific period of time. This figure will be representing in days, in 15-day increments. The most common rate locks are 30, 45, and 60 days; though these are not the only options.

rate lock

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As a rule of them, the longer your rate lock period is, the higher your mortgage rate will be. Here is a breakdown of how much your initial rate usually rises in regards to how long your rate lock period is:

  • 15-day: market rate + 0.125%
  • 30-day: no difference from market rate
  • 45-day: market rate + 0.125%
  • 60-day: market rate + 0.25%

The longer your rate lock period is, the higher your mortgage rate will be. Anything higher than 60 days will usually include upfront fees in order to keep your rate where you want it against where the market is going. There are instances in which a lender will give a rate lock of one year for things like new construction housing. You should be careful when locking a rate for a long period of time.

When you’ve entered upon your agreed upon rate-lock period, make sure to do all you can to close your loan on-time. If it expires, your lender has every right to cancel the agreed upon mortgage rate if they so choose. This is not common, however. Usually your lender will allow for a rate-lock extension: though it will come at a cost. Sometimes this cost is paid by the mortgage lender, but oftentimes will be added to the borrower’s tab.

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