What is the purpose of mortgage rate lock extensions?

Mortgage rate lock extensions prevent your lender from raising your prospective interest rate as you secure a loan and close on the home. Keep in mind that if rates are on the decline, though, you may not be able to take advantage of a rate drop unless your rate lock extension includes a “float-down” option.

How long is a typical rate lock period?

Many lenders offer initial rate locks for 30, 45 or 60 days. Some allow up to 90 or 120 days. If you’re building a new home, you might be able to lock your rate for up to a year or longer.

Are rate lock extension fees refundable?

It depends on your mortgage lender. Many do impose a non-refundable extension fee.

How to avoid mortgage rate lock extension fees

Written by

Suzanne De Vita,

Edited by

Laurie Richards,

Reviewed by

Thomas Brock, CFA, CPA,

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Published on April 19, 2024 | 4 min read

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Key takeaways

A mortgage rate lock extension fee is a charge borrowers pay to retain the interest rate they were initially quoted after a specific lock period expires.
A lock extension fee can cost a few hundred or thousand of dollars, depending on the lender's policy, the reason for the extension and other factors.
To avoid paying an extension fee, keep on top of your mortgage application and communicate regularly with your lender.

What are mortgage rate lock extension fees?

A mortgage rate lock extension fee is an upfront cost you’ll pay to extend the interest rate lock period on your mortgage. A rate lock guarantees the lender will honor your quoted rate for a specific time. The initial rate lock on a 30-year mortgage typically lasts 30 or 45 days, though some lenders allow up to 60 days.

If you were to get a loan estimate for a $400,000 mortgage at 6.8 percent, for example, the lender might allow you to lock in that mortgage rate for up to 30 days. As long as the transaction closes during the rate lock period, you’ll get that promised rate. If your loan doesn’t close by the end of that window, your lender might charge you an extension fee to keep that lower rate while you finalize the deal.

The extension fee often only applies if you were responsible for the closing delay. If the lender caused the delay, most won’t charge an extension fee. A rate lock safeguards against rate increases as you complete the home-purchase or mortgage-refinance process. If rates decreased, however, since you locked in, the lender might charge you a similar fee to relock to a lower rate.

How much are rate lock extension fees?

Generally, a rate lock extension fee runs anywhere from 0.25 percent to 1 percent of your loan principal. It might be charged as a flat fee instead of a percentage. Guild Mortgage, for example, charges $1,500 for a 120-day lock, while AmeriSave Mortgage charges $500 for a 90-day lock.

Some lenders base the cost on the reason for the extension. Better, for instance, charges 50 percent of the extension fee to the borrower if the closing delay was caused by a third party, like the appraiser or settlement company. It’ll charge you the full fee if you alone caused the delay.

Keep in mind: The extension fee applies in cases of late closings or longer-than-typical rate locks. For an initial rate lock — often 30 to 45 days — many lenders don’t charge a fee. Instead, the cost is baked into your rate or mortgage points, another upfront cost.