When can I lock my mortgage rate?

So you’re doing your due diligence, and shopping around for mortgage rates and think you’ve found the best lender and decide to get a loan estimate to solidify things.
You carry on with your home search and feel confident you have a great rate to buy your dream home. Upon going under contract, you circle back to the lender expecting the rate you were quoted a week ago, but it’s gone up 1/8%. How could this be you ask?
Well… until you enter into a purchase agreement, and lock your mortgage rate, there is no guarantee you will be provided the rate quoted. This is listed in the fine print, but may have not sunk in.
Mortgage rates fluctuate daily as a function of the Bond market. Most lenders provide rate quotes with a 30 day rate lock. The rate can change if you need a longer rate lock period to meet your closing date.
For example, you agree to a longer escrow period and closing is set for 80 days out. This will require the lender lock the loan with a 90 day rate lock (done in 15 day intervals), which will be worse pricing than a 30 day rate lock.
Another option to consider is floating the rate until you get closer to the closing date. There is risk associated with this strategy as there is no protection if rates rise while your loan is in process and you may be forced to lock a higher rate.
Some lenders have a one-time float down option if rates improve significantly while your loan is in process. Locking with a lender that has this option provides the security of a rate lock with the hedge of a float down if things improve. Best of both worlds!

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