How rate locks, float-downs, and extensions work
5 min read · Rates
The short answer
A rate lock is a lender's commitment to honor a specific interest rate and points for a set number of days. Longer locks cost more, extensions cost more, and a float-down option lets you capture a lower rate if the market improves before closing.
What you are buying
Locking transfers the risk of rising rates from you to the lender for a defined period, usually 15 to 60 days. That protection is priced into the rate, so a 60-day lock is priced slightly higher than a 15-day lock on the same loan.
When floating makes sense
Floating is a deliberate bet that rates will improve before you must close. It can be reasonable when your timeline is long and flexible, and unwise when the closing date is fixed and a rate increase would push you past your qualifying ratios.
Extensions and re-locks
If the file is not ready when the lock expires, an extension is purchased in days and paid as a cost or a rate adjustment. The most common causes of extensions are late documents, appraisal delays, and contract changes, so keeping documentation current is the cheapest lock strategy there is.
Float-downs
Some lenders allow one float-down if the market improves by a defined margin after you lock. Terms differ by lender and program. Ask what the trigger is, when it can be exercised, and what it costs before assuming one is available.
Talk it through with a licensed advisor
Every file is different. We will run your numbers through multiple wholesale lenders and explain the trade-offs before you commit to anything.
This article is general education, not financial advice, and is not an offer or commitment to lend. Program terms are subject to credit approval and may change without notice.
Ready to apply what you learned?
Start your application online at your own pace, or talk to a licensed advisor first. Either way, your next step stays clear.