Ask an Agent: When Do I Lock in My Mortgage Rate?

by Mark Wellborn

Ask an Agent: When Do I Lock in My Mortgage Rate?: Figure 1

In this week’s installment of Ask An Agent, a reader inquires about when he should lock in his mortgage rate when buying a home. Jen Angotti of Long & Foster offers up some insight.

Question: At what point in the home-buying process do I lock in my mortgage rate? I know that real estate transactions can take weeks/months, and given how much rates have been bouncing up and down over the last few months, I am worried that I could miss a good opportunity if I am not able choose the exact day that I lock in my rate.

Answer: If a buyer makes an offer on a home and it is accepted, the contract is then ratified, which means all the parties have agreed to the terms of the contract. Ratification usually takes one to five days once the offer is submitted. While you should always contact your lender about the best time to lock in your rate, typically this happens immediately after ratification.

In the current market, many buyers may be interested in foreclosure or short sale properties where the contract process is a bit different, and the buying process can take 60 to 90 days. If you’re buying a short sale or foreclosure and the closing date is 60 days out, you need to consult your lender about the best time to lock in your rate.

As you noted in your question, interest rates have been all over the place in the last year. Because of the movement, I would recommend choosing a mortgage lender or bank that gives you the option to “float down” the interest rate if rates fall. A “float down” is when the lender allows the purchaser to lower their interest rate from the original interest rate lock. This will protect borrowers if rates increase but also give purchasers some downward mobility. Some lenders charge for this service, so make sure you ask!

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This article originally published at http://dc.urbanturf.com/articles/blog/ask_an_agent_when_do_i_lock_in_my_mortgage_rate/1206


  1. Keith said at 3:55 pm on Thursday August 6, 2009:
    Question would have been better put to a mortgage loan officer. My experience was that it was not after ratification. My closing was almost two months after that date. In fact, my loan officer told me the earliest I could have locked was 30-45 days before closing and it might have cost me to do so. I ended up locking a week before closing. It's possible I was played, but it all ended up happy.
  1. David said at 6:24 pm on Thursday August 6, 2009:
    I think Keith is right. I didn't lock in mine until well after the contract was signed. I think there is a lot of negotiating room, and a lot of variables at play. Generally, the earlier you lock, the more "expensive" it is.
  1. Jen Angotti said at 11:36 pm on Thursday August 6, 2009:
    Actually I DID consult a lender, Jennifer Landgraff at First Financial Services, Inc., before I answered the question. I wanted to give accurate information. If you're 60 days from closing in ANY type of real estate deal, you don't lock immediately after ratification which I stated in the second paragraph. Most deals that aren't a short sale or foreclosure close in 30-45 days. When it's a regular real estate transaction, it's very common to lock immediately after you ratify. Normal ratification takes place 1-5 days within the 30 day period you've allotted to close. That's why the locking happens immediately because the loan needs time to go through under writing in order to close in 30 days.

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