What Happens to My Mortgage Application If Interest Rates Change?
If interest rates change after you have locked in a rate with your lender, your locked rate is protected for the duration of the lock period. If rates change before you have locked, your estimated rate and monthly payment may adjust.
Rate Locks
Once you have a signed rate lock agreement with your lender, the locked rate is subject to the terms, conditions, and expiration specified in that agreement. The rate-lock period is determined by your lender and can vary. If rates rise during that period, your locked rate is protected per the agreement.
Pre-Lock Changes
If rates change before you lock, your lender will provide updated rate estimates and disclosures. Your pre-approval amount may also be affected if the rate change significantly impacts your qualifying amount.
What to Do If Rates Drop After You Lock
Some lenders offer a float-down option that allows you to benefit from lower rates if they decrease during your lock period. This feature is not universal and should be discussed with your lender before locking.
Market Context
Interest rates fluctuate based on economic conditions, and timing the market perfectly is not realistic. Rate-lock timing should be discussed with your lender based on the transaction and available options.
Important note: Rate lock terms, float-down options, and lender policies vary. Discuss these details with your lender so you understand your options before locking.
Disclaimer: This information is for educational purposes and does not constitute legal, tax, or financial advice. Loan programs, interest rates, guidelines, and requirements change over time. Consult a qualified professional for guidance specific to your situation.
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Plan With Confidence
Understanding how rate changes affect your application helps you plan with confidence. Contact me at (510) 799-6388 to discuss your options.
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