Understanding a Lock-In Rate: What It Is and Why It Matters

If you're in the process of buying a home or refinancing, you've probably heard the term lock-in rate tossed around. It sounds simple, but it plays a big role in how your mortgage unfolds—especially in a market where interest rates can shift quickly.

So, what exactly is a lock-in rate? And how do you know when (or if) to use it? Let’s break it down.

What Is a Lock-In Rate?

A lock-in rate (also called a rate lock) is when your lender agrees to hold your interest rate for a set period of time. The rate is typically locked when a homebuyer is under contract.

Think of it as hitting the pause button on market volatility. Even if rates climb while you’re under contract, your rate stays put—as long as you close within the lock period.

Key Features of a Lock-In Rate

Fixed Timeframe: Rate locks usually last 30, 45, or 60 days, but this can vary based on your loan and lender.
Applies to Approved Loan Terms: The rate lock applies to the loan product and terms you’re approved for.
May Include a Cost: Some extended lock periods or re-lock options may come with a fee. Always ask your lender what’s included.

Why Locking Your Rate Matters

Mortgage rates can shift daily—even hourly—based on economic factors, inflation data, Fed announcements, and more. If you're under contract and nearing closing, a sudden jump in rates can put a dent in your monthly budget.

Locking gives you peace of mind. It protects you from upward rate swings while you finalize your home purchase or refinance. This can be especially helpful if you're juggling other moving parts like inspections, appraisals, or coordinating a sale on your current home.

Let’s say you’re buying a home and expect to close in 45 days. Your lender offers a 45-day rate lock. If rates go up during that time, you’re shielded. If they go down, you might feel a little FOMO—but you’ve avoided the risk of a higher rate impacting your approval or monthly costs.

When Should You Lock In Your Rate?

Timing a rate lock is a bit like timing the stock market—hard to do perfectly. But there are a few good rules of thumb:

You’re under contract: Once you’ve found a home and signed a purchase agreement, that’s usually the right time to lock.
You’re within 30–60 days of closing: Most lock periods are designed to cover this timeframe.
You’re happy with the rate: If the current market rate works for your budget and long-term plans, locking can protect your peace of mind.

What Happens If You Don’t Lock?

Without a rate lock, your interest rate is subject to market changes all the way up until closing. If rates go up, so does your monthly interest cost. In some cases, a higher rate could even affect your loan approval if it pushes your debt-to-income ratio over the limit.

If rates drop, great—but unless you’ve planned for flexibility, the risk of rising rates can outweigh the potential savings.

Final Thoughts: Is a Lock-In Rate Right for You?

A lock-in rate isn’t about getting the lowest rate on the planet—it’s about stability and predictability. In a tough market, it removes one big unknown from the equation. For many homebuyers and refinancers, that peace of mind is worth it.

Still, there’s no one-size-fits-all. Your financial goals, timeline, and comfort with risk all play a role. That’s why it’s so important to talk through your options with you Ruoff loan officer who knows your full picture.

Bottom line? A rate lock can help you sleep a little easier as you head toward the finish line. And in this market, that’s no small thing.

Have questions about locking in your rate or exploring timing options? Let's connect and walk through it together.

About Ruoff Mortgage

At Ruoff Mortgage, we understand that buying a home is one of life’s biggest moments – not just as a financial decision, but a personal one. For more than 41 years, we’ve proudly helped families turn their dreams into reality. From our roots in northeast Indiana to now serving homebuyers throughout the Midwest, our focus has stayed the same: delivering exceptional service rooted in care, speed, and community. With an average 15-day clear-to-close time, our team is here to make your journey to homeownership as smooth and stress-free as possible. When you're ready to take the next step, we’re here to walk with you, every step of the way.