When to lock in your mortgage rate

Whether you optimistically hope that mortgage rates will decline or are resigned that rates will stay elevated above the historic lows of 2021, you may be wondering when it makes sense to sign an agreement with your lender that locks in a specific rate.

We asked two experts for advice: Eric Johnson, a branch manager and mortgage originator in Green Bay, Wis., with Inlanta Mortgage, which is based in Pewaukee, Wis.; and T.J. Williams, a regional vice president and real estate consultant in New York City with Wealth Enhancement Group, a registered investment adviser. Both responded via email, and their responses were edited.

- How does a typical rate lock work?

Williams: Mortgage rate locks allow borrowers to lock in a specified interest rate for a stated period after the purchase agreement is signed to buy a home. This helps the borrower in that the expected cost of ownership of the home will not change based on a possible increase in interest rates between the time that they made the offer or locked in the rate and the time when they close on the home. Often, the buyer can lock in the rate any time after they are approved and sign the purchase agreement up to five to 10 days before closing.

There are two basic types of rate locks. The first is often a built-in 30- or 60-day rate lock. During this time, the application is processed, income is verified, inspections are completed and the lender, the seller and the borrower work together to get to the closing on the home. The buyer can often choose when during this process to lock in the rate. The second is an "extended rate lock." This is an additional extended lock for a varying period (usually an additional 30 to 60 days but can be extended up to almost a year for new construction) and used when the borrower believes the initial 30 to 60 days may not be enough time...