What Happens If Your Lock Expires on Your Mortgage?

by KC Hernandez ; Updated July 27, 2017
A woman is signing a contract.

You lock in a mortgage loan rate with a specific closing date in mind. If your closing is delayed and your rate lock looks as if it will expire, you may have the option to extend the lock beforehand, depending on the lender. But if your lock expires before your mortgage closes, you may end up paying more for the rate you initially wanted.

When Rates Go Up

You'll find yourself in one of three situations when your rate lock expires: rates will have risen, rates will have fallen, or rates remained unchanged. Should your lock expire while rates are on the rise, you can expect to pay more for the rate you initially locked in -- through points -- or you can simply accept the higher rate. A point is equal to one percent of your loan amount. Lenders may charge "discount" points for a below-market interest rate. Discount points increase your closing costs.

Best-Case Scenarios

If your rate-lock expires when rates have fallen or rates haven't moved, you may be able to pick up where you left off. You may end up with the same interest rate at no additional cost; however, it's unlikely your lender will allow you to take advantage of falling rates and lock in a lower rate at no cost. You can then lock the rate again for a specified amount of time, either 10, 15, 30, 45 or 60 more days. Technically, you can also "float," or let your interest rate fluctuate with the market until closing; loan officers may advise against this if they deem it too risky.

About the Author

K.C. Hernandez has covered real estate topics since 2009. She is a licensed real estate salesperson in San Diego since 2004. Her articles have appeared in community newspapers but her work is mostly online. Hernandez has a Bachelor of Arts in English from UCLA and works as the real estate expert for Demand Media Studios.

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