A rate lock is the lender's promise that, for a defined period (usually 30, 45, or 60 days), they'll honor today's rate even if market rates rise. Floating means leaving it un-locked and accepting whatever rate the market gives you at closing. The decision feels like gambling, but it's really an asymmetric-risk question.
Standard Lock Periods
| Lock Length | Typical Use | Cost |
|---|---|---|
| 15 days | Closing imminent | Free / discounted |
| 30 days | Standard close | Free |
| 45 days | Most common | Slight pricing impact (~0.05%) |
| 60 days | Longer timeline | +0.10% – 0.15% to rate |
| 90+ days (extended) | New construction, complex closings | +0.25%+ or upfront fee |
When to Lock Immediately
- Closing is less than 30 days out
- Rates have been rising over the past 2 weeks
- Major economic data is coming (Fed meeting, jobs report, CPI release)
- You can't afford the higher payment if rates rise
- You feel anxious watching rates — peace of mind has value
When Floating Might Make Sense
Floating only makes sense when rates are clearly trending down AND your closing is far enough out for the trend to develop. If rates have dropped 0.30% in the past week and your closing is 45 days away, floating for another 1–2 weeks may capture another 0.10–0.20%. But floating is a bet, not a strategy.
The upside of floating is usually 0.05% – 0.25% lower rate. The downside is rates can rise 0.25% – 0.75% in a single bad week. Asymmetric risk says: lock when in doubt.
Float-Down Provisions
Some lenders offer a "float-down" — if rates drop more than 0.25% before closing, they'll lower your locked rate once. This costs a small upfront fee (often 0.125% – 0.25% of the loan amount). It's the best of both worlds: protection against rises, and the option to capture a meaningful drop. Worth asking about, especially in volatile markets.
In doubt, lock. The downside of a worse rate over 30 years vastly outweighs the upside of a small lock-day win. Float only when rates are clearly trending lower and you have time on your side.
