Definition
A rate lock commits your lender to a specific interest rate for a set period (30-60 days), protecting against rate increases before closing. It's valuable when rates are volatile, though longer locks may cost more.
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When interest rates are volatile, borrowers can lock in a favorable rate to protect against increases before closing. Rate locks specify the number of days the rate is guaranteed and may include provisions for rate floats if rates decline. Lenders typically charge a fee for longer locks.
Pro Tip
Lock your rate when you find one you're happy with; don't bet on rates dropping further unless you have a floating option.
Example
A borrower locks in a 6.0% rate on Monday when rates are 6.5%. If rates rise to 6.8% by closing 45 days later, the borrower still receives the locked 6.0% rate.