When your mortgage rate lock period expires before closing, you need to arrange an extension with your lender. If you do not extend, your locked rate expires and you will need to lock at the current market rate which may be higher.
Communicating early with your lender is the key to handling an expiring rate lock smoothly. Here is what happens and what you can do.
How Extensions Work
Most lenders offer rate lock extensions if you need more time before closing. Extensions typically cost a fee, which may be a flat amount or calculated based on how many extra days you need. Some lenders offer a one-time free extension of a few days, but this is not guaranteed.
The cost of an extension depends on current market conditions and the length of the extension. Contact your lender well before your lock expires to discuss options. Waiting until the last day may limit your choices.
Cost of Extending
Extension fees vary by lender and market conditions. A typical 15-day extension might cost between 0.125% and 0.25% of the loan amount. Longer extensions or extensions during volatile markets can cost more. Always ask your lender for the exact cost before agreeing.
In some cases, your lender may offer to extend at no cost if the delay was caused by them rather than by you. For example, if processing delays on the lender's side pushed closing past your lock expiration, they may waive the extension fee.
How to Prevent Lock Expiration
The best way to handle an expiring lock is to prevent it from happening. Choose a lock period that extends beyond your expected closing date. If your closing is 30 days away, consider a 45-day lock to give yourself a buffer. Longer locks cost more but provide peace of mind.
Stay in close communication with your lender, real estate agent, and title company throughout the process. If any party identifies a potential delay, let your lender know immediately so they can help you arrange an extension or adjust the lock.
Bottom Line
If your rate lock expires, you can extend it for a fee or accept the current market rate. Communicate early with your lender and choose a lock period with a buffer to avoid last-minute surprises.
