Can You Change Your Mortgage Rate After Locking?

A mortgage rate lock is a lender’s commitment to secure a specific interest rate on a home loan for a defined period. This mechanism provides certainty, protecting borrowers from potential rate increases during loan processing. Many borrowers wonder if this locked rate is final or if it can change.

Mortgage Rate Lock Fundamentals

A mortgage rate lock is a formal agreement where a lender guarantees an interest rate for a set duration, typically 30, 45, or 60 days. This “lock period” allows time for underwriting, appraisal, and other necessary steps before expiration. Borrowers lock a rate to mitigate the risk of market interest rates rising during loan approval. This commitment provides stability in financing terms.

Borrowers often lock a rate when market rates are favorable, protecting against future volatility. While generally binding, certain conditions can influence a rate lock. Understanding the initial terms, including the lock period and its expiration, is key to knowing if and when a rate might adjust. This understanding helps manage expectations about the final loan terms.

Conditions Allowing Rate Adjustments

A locked mortgage rate can adjust under several distinct conditions, directly addressing whether a seemingly final rate can indeed change. Some lenders offer a “float-down” option, allowing borrowers to secure a lower rate if market rates decline significantly after the initial lock. This option is not universally available and must be part of the original agreement, often requiring a specific market rate drop. A fee may also apply.

Borrower-initiated changes to loan application details can also adjust the locked rate. Modifications like a change in loan amount, property type, appraisal value, or loan program can invalidate the original lock. A significant drop in the borrower’s credit score might also necessitate re-pricing the loan. These changes trigger a lender review, as the initial rate was based on the original application.

If the loan does not finalize within the lock period, the rate lock expires, leading to re-pricing. The interest rate will be re-evaluated based on prevailing market rates at the time of extension or re-lock. Delays in closing, often due to unforeseen circumstances or documentation issues, can necessitate a lock extension. Lender error or non-compliance could also lead to a rate adjustment.

Navigating a Rate Adjustment

To consider a float-down option, the borrower contacts their loan officer. Understand the lender’s specific policies, including any minimum rate drop requirements or associated fees. The borrower then submits a formal request to secure the lower market rate. This proactive step allows the borrower to benefit from favorable market movements.

If loan details change after the initial lock, the lender automatically re-evaluates the interest rate. For example, if a borrower changes the loan amount or property’s appraised value, the lender re-prices the loan. The borrower’s action triggers this reassessment. New loan estimates reflecting the revised terms are then provided.

If closing extends beyond the original lock period, the borrower must request a lock extension. This involves communicating with the loan officer and understanding the extension terms. Extensions often come with fees or a slightly higher interest rate. This reactive step is necessary to avoid the loan being re-priced at potentially higher current market rates. Clear communication with the loan officer is important throughout any adjustment process.

Financial and Timeline Considerations

Adjusting or re-locking a mortgage rate has financial implications and affects the closing timeline. A float-down option, while potentially lowering the interest rate, often involves a fee, which might be a flat charge or a percentage of the loan amount. Extending a rate lock beyond its original expiration almost always incurs fees or a slightly higher interest rate. These costs must be weighed against potential savings or risks.

Any re-pricing or rate adjustment can extend the closing process. New disclosures, like updated Loan Estimates, must be issued to the borrower, and regulatory requirements mandate specific waiting periods before closing can occur after significant changes. This additional processing time can delay the scheduled closing date, impacting move-in plans or contractual deadlines. Borrowers should factor in these potential delays.

Deciding on a rate adjustment involves a risk-versus-reward assessment. Borrowers must evaluate if potential interest savings from a float-down justify associated fees. When facing an expired lock, compare extension fees against the risk of re-pricing at a higher market rate. All rate changes are documented in updated Loan Estimates and final Closing Disclosures, providing transparency regarding the revised terms.