In the world of mortgage refinancing, timing can mean thousands of dollars in savings or lost opportunity. A rate lock is a commitment from your lender to honor a specific interest rate for a defined period while your application is processed. Understanding how to strategically use rate locks is essential for optimizing your refinance outcome.
When you apply for a refinance and receive a rate quote, that rate isn't guaranteed unless you "lock" it. A rate lock protects you from market fluctuations during the processing period—typically 30 to 60 days. If rates rise after you lock, your rate stays the same. However, if rates fall, you're generally locked into the higher rate unless your lender offers a float-down option.
Some lenders, including select partners in the CrestBridge network, offer float-down provisions. This feature allows you to capture a lower rate if market rates drop by a specified amount (usually 0.25% or more) after you've already locked. Float-down provisions may carry a small additional cost but can provide meaningful protection in volatile rate environments.