Extended Rate Locks vs. Standard Rate Locks

I am closing on a house I am building in 6 months from today. How early can I lock in a rate?

1 Answer

There are generally two types of rate locks:
standard rate locks and extended rate locks.

Standard rate locks are typically for 15, 30, 45 or 60 day periods. Some lenders offer standard rate locks of up to 90 days.

Extended rate locks are for lock terms that exceed the lender's longest standard term. I've seen extended rate locks available for terms of up to 360 days.

Typically, extended rate locks require a lock-in fee which can be as much as 1% of the loan amount. Some lenders will credit this fee back to you at closing. Others won't. In addition, the rate at which you are "locked-in" can be as much as 1% higher than the "going rate" for the same loan with a 60-day lock.

Some lenders offer an extended lock with a "float-down" feature, which means that the rate you lock in acts as a cap; if, within a certain period of time before the extended lock expires, the "going rate" is lower than the original locked rate, you can re-lock it at the lower rate.

Different lenders offer different combinations of rate lock features. You should have your loan officer go over the different features available and figure out the combination that works best for you.