The best time to lock your mortgage rate is when you have a signed purchase contract, your loan is nearly approved, and you are within 30-60 days of closing.
Consider float-down options that let you benefit if rates drop after locking. Shorter locks cost less. Longer locks offer safety but cost more.
Don't lock too early, as you might miss improvements if rates drop. Don't lock too late, as you are exposed to rate increases.
When to Lock
Lock when: your contract is accepted, all conditions are known, and you are comfortable with the current rate. Avoid locking before you have a contract, as rates could improve or you might not find a home.
Lock Period Options
Common lock periods: 30-day (lowest cost), 45-day (moderate cost), 60-day (higher cost), 90-day (highest cost). Longer locks cost about 0.125-0.5% more in points or rate.
Float-Down Benefits
A float-down option allows you to get a lower rate if market rates drop after you lock. Not all lenders offer this. Those that do may charge a fee or require a minimum rate improvement (often 0.25%).
Shorter vs Longer Locks
Shorter locks (15-30 days) have the lowest rates and costs but risk missing the closing date. Longer locks (45-90 days) cost more but protect against delays.
Market Timing
Don't try to time the market perfectly. Lock when the rate works for your budget. If rates drop significantly after locking, ask about float-down options or pay for a float-down at the time of locking.
Lock Strategy by Scenario
Scenario 1: Closing in 30 days, rates are favorable. Lock immediately with a 30-day lock. Scenario 2: Closing in 60 days, rates trending down. Lock with a 60-day lock and float-down option.