Mortgage rates move every day — sometimes several times per day.
That’s why knowing when to lock, how to compare quotes, and whether to buy points can save you thousands over the life of your loan.
In this guide, we’ll break down how rate locks work, how to handle float-downs when the market shifts, and how to make sense of points and APRs using the Mortgage Rate Calculator
1. Why Rate Shopping Matters More Than Ever
Even a 0.25% difference in rate can change your monthly payment by over $100 on a median-priced home.
With lenders repricing multiple times per day, timing and comparison are everything.
| Loan Amount | Rate | Monthly (P&I) | 30-Year Total |
|---|---|---|---|
| $400,000 | 6.50% | $2,528 | $910,000 |
| $400,000 | 6.25% | $2,463 | $887,000 |
| Savings | — | — | $23,000 ✅ |
2. What Is a Rate Lock?
A rate lock is your lender’s guarantee that your quoted rate won’t change for a set period (typically 30, 45, or 60 days) while your loan closes.
| Lock Term | Typical Cost | When It’s Used |
|---|---|---|
| 30 Days | Free or minimal | Standard purchase/refi |
| 45 Days | Slightly higher rate | Slower underwriting |
| 60–90 Days | 0.125–0.25% rate add-on | New construction or longer closings |
If they drop, you may need a float-down option to capture the improvement.
3. Float-Downs: Insurance Against Market Drops
A float-down is an agreement that lets you lock in a lower rate if the market improves before closing.
| Type | How It Works | Typical Cost |
|---|---|---|
| Single Float-Down | One-time rate drop (0.25–0.50% improvement required) | 0.125–0.25 points |
| Free Float-Down | Built into certain programs (rare) | Higher initial rate |
| Custom Lender Option | Negotiated case-by-case | Varies |
Example:
You lock at 6.75%, but rates fall to 6.25%.
Your lender’s float-down triggers a 0.25–0.375% improvement depending on policy.
💡 Always get float-down terms in writing — they’re not automatic.
4. Comparing Rate Quotes: APR Isn’t Everything
Lenders must disclose APR (Annual Percentage Rate) — a figure that includes both the rate and fees.
But APR isn’t always a perfect comparison because it assumes you’ll keep the loan for the full term.
| Quote | Rate | Points/Fees | APR | True Winner? |
|---|---|---|---|---|
| Lender A | 6.25% | 1 point ($4,000) | 6.39% | ✅ Lower long-term |
| Lender B | 6.50% | No points | 6.50% | Better short-term |
Use the Mortgage Rate Calculator or Mortgage Points Buy Down Rate to find your personal break-even point.
5. Mortgage Points Explained: Prepaying for a Lower Rate
Points = prepaid interest.
Each point costs 1% of the loan amount and typically lowers your rate by about 0.25%.
| Loan | Points | Rate | Monthly (P&I) | Savings/mo | Break-Even (Months) |
|---|---|---|---|---|---|
| $400,000 | 0 | 6.50% | $2,528 | — | — |
| $400,000 | 1 pt ($4,000) | 6.25% | $2,463 | $65 | ~62 months (5.2 yrs) |
✅ Good idea: if you’ll stay >5 years
🚫 Skip it: if you plan to sell/refi sooner
For detailed buydown math, check out Mortgage Points: Buy Down Your Rate
6. Lock Timing: How to Read the Market
Mortgage pros watch 10-year Treasury yields and MBS prices to decide when to lock or float.
| Market Signal | What It Means | Strategy |
|---|---|---|
| Yields Rising | Rates likely to increase | Lock immediately |
| Yields Dropping | Rates likely to fall | Float carefully |
| Fed Meeting Week | Volatility expected | Lock early |
| Calm Market | Flat week, minimal change | Compare multiple lenders |
7. How Long Should You Lock?
The best lock term depends on your closing timeline and market volatility.
| Closing Timeline | Suggested Lock | Notes |
|---|---|---|
| 30 days or less | 30-day lock | Often free |
| 31–45 days | 45-day lock | Common for FHA/VA |
| 46–60 days | 60-day lock | Use if underwriting or appraisal may delay |
| 60+ days | 90-day lock | New construction or long escrow |
If rates are trending down, discuss a float-down option before locking.
8. Rate Shopping Tips: Get Apples-to-Apples Comparisons
When collecting quotes:
Request all estimates on the same day — rates change daily.
Use the same loan type, term, and down payment for each quote.
Ask for the exact lock period on each quote.
Compare total cash-to-close and monthly payment, not just rate or APR.
Then use your Mortgage Rate Calculator to model how rate and point changes affect your monthly budget.
9. Common Rate Lock Pitfalls to Avoid
❌ Assuming “rate quoted” = “rate locked” — it’s not final until you sign a lock agreement.
❌ Waiting too long in a rising market — missing even 0.25% can cost thousands.
❌ Ignoring fees tied to longer locks — extended locks can quietly raise APR.
❌ Forgetting float-down expiration — it’s only valid within the lock term.
❌ Comparing different loan products (FHA vs Conventional) — always standardize first.