A mortgage pre-approval does not lock in your interest rate. The rate a lender mentions during pre-approval reflects that day’s market pricing and your financial profile at the moment of review; it is an estimate, and the lender is under no obligation to hold it while you shop for a home. Locking the rate is a separate step, and in most cases it happens only after you have a signed purchase contract for a specific property.
Why the Pre-Approval Rate Is Only an Estimate
A pre-approval letter confirms that a lender has reviewed your income, assets, debts, and credit history and is conditionally willing to lend you up to a certain amount. The rate discussed during that review is a preview of what you’d pay if you locked in that day, not a price tag you can carry to the closing table.
Pre-approval letters typically expire within 30 to 60 days.1Consumer Financial Protection Bureau. Get a Preapproval Letter If your search runs longer, you’ll need a fresh letter, and the estimated rate on the updated version could be higher or lower depending on how the market has moved.
When You Can Actually Lock Your Rate
A rate lock, sometimes called a rate commitment, is the lender’s promise to hold a specific interest rate and number of discount points for a set period while your loan is processed.2Board of Governors of the Federal Reserve System. A Consumer’s Guide to Mortgage Lock-Ins In most cases you need a signed purchase contract for a specific property before a lender will lock, because the home’s location, type, and appraised value all affect your final loan terms.
Once you’re under contract, you can typically request a lock at any point before closing. Timing varies by lender: some allow a lock at application, others wait until the loan is further along in processing.2Board of Governors of the Federal Reserve System. A Consumer’s Guide to Mortgage Lock-Ins
Lock-and-Shop Programs
Some lenders offer lock-and-shop programs that secure a rate before you’ve found a property. These programs typically hold the rate for 90 to 120 days while you search and usually require an upfront fee. You’ll still need to go under contract within the lock period for the rate to apply at closing. In a volatile rate environment the protection can be worth paying for; if your search is likely to be short, the upfront cost often isn’t.
What the Rate Lock Agreement Covers
When you lock, the lender issues a rate lock agreement spelling out the locked interest rate, the number of discount points or lender credits, and the expiration date. Common lock periods are 30, 45, 60, or 90 days. The expiration date is calculated from the day the lender confirms the lock, and your loan must close before that date for the locked terms to apply.
Before signing, verify that the agreement matches what the loan officer quoted, especially the loan program, down payment percentage, and any credits. If those details are wrong, the locked terms may not hold. Also confirm the annual percentage rate, which reflects the total cost of the loan including points and fees, not just the interest rate.
Your lock status shows up on the Loan Estimate. Federal rules require lenders to display, at the top of the first page, whether your rate is locked; if it is, the Loan Estimate lists the date the lock expires.3Consumer Financial Protection Bureau. Questions About Your Loan Estimate
What a Rate Lock Costs
Many lenders include a standard 30- to 45-day rate lock at no separate charge. The cost is typically built into the interest rate itself, so you won’t see a line-item fee. Longer lock periods and special features carry additional charges, generally 0.25% to 1% of the loan amount. On a $400,000 mortgage, that’s $1,000 to $4,000.
Float-Down Options
A float-down option lets you adjust your locked rate downward if market rates drop before closing. It allows a one-time adjustment, and lenders typically require rates to fall by a minimum amount before you can use it. Float-downs aren’t free: lenders generally charge an upfront fee of 0.25% to 1% of the loan amount, or they build the cost into a slightly higher initial rate. Whether it pays off depends on how far rates would need to fall to offset the fee.
What Happens If Your Rate Lock Expires
If your lock expires before closing, you generally have two options:
- Pay an extension fee to keep the locked rate in place for an additional period, usually 15 days at a time. Extensions typically run 0.125% to 0.25% of the loan amount per increment, or roughly $500 to $1,000 on a $400,000 loan. Most lenders allow up to three extensions, and many will waive the fee if the delay was on the lender’s side, whether a slow appraisal, an underwriting backlog, or a title company scheduling problem.
- Accept the current market rate and re-lock at whatever is available that day, which could be higher or lower than your original rate.
If rates have risen since your original lock, losing it means higher monthly payments for the life of the loan. If rates have fallen, re-locking at the lower rate could save you money. To avoid unplanned expirations, choose a lock period that realistically covers your expected closing timeline plus a buffer of at least a week. For new construction or complex transactions, a longer initial lock is usually safer than relying on extensions.
Why Your Rate Can Still Change Before Closing
Market Movement
Mortgage rates track closely with yields on 10-year Treasury notes. When investor demand for Treasuries drops and yields rise, lenders raise mortgage rates to compensate. Federal Reserve policy decisions, inflation reports, and broader economic uncertainty all drive these daily shifts. Until you lock, the lender will price your loan based on whatever the market dictates when you’re ready to finalize.
Changes to Your Financial Profile
Your own finances can also shift the rate you’re offered. A drop in your credit score or a rise in your debt-to-income ratio, whether from a new car loan, a large credit card purchase, or a job change, can push your rate higher during final underwriting. Lenders re-check your credit and finances before closing, so the snapshot from your pre-approval may no longer match your current situation.
To protect the rate you were initially quoted, avoid opening new credit accounts, making large purchases on existing credit lines, or changing employers between pre-approval and closing. A stable financial profile gives you the best chance of receiving favorable terms when it’s time to lock.