Comprehensive Guide
Learn more in our Loans & Mortgage Guide.
How it works
mortgage rate lock decision tool takes your inputs and produces monthly payment at current rate, monthly if rate drops, monthly if rate rises, value of locking, break-even basis points. Decide whether to lock your mortgage rate now or wait — analyze the cost of locking vs floating. You provide 5 inputs: Loan amount (currency, in dollars) (default: 300000 dollars); Current offered rate (%) (percent, in percent) (default: 6.5 percent); Rate lock period (days) (number) (default: 30); Expected rate movement (basis points) (number) (default: -12.5); Rate lock fee ($) (currency, in dollars) (default: 0 dollars). The calculator returns 5 outputs: Monthly payment at current rate (a secondary output); Monthly if rate drops (a secondary output); Monthly if rate rises (a secondary output); Value of locking (a secondary output); Break-even basis points (the primary result). Loans and mortgages are amortized instruments where the split between interest and principal shifts every month. Understanding the total cost of borrowing — not just the monthly payment — is the difference between a sustainable debt load and one that erodes your net worth over time. This calculator reveals the full amortization picture. The underlying formula: Monthly payment = PMT at rate for term. Break-even = fee value ÷ loan sensitivity per bp. With the default values, break-even basis points is computed from the interaction of every input field — change any one of them and the result updates immediately, so you can stress-test different scenarios without re-entering the whole form. Adjust the inputs to match your real financial situation. The defaults are realistic starting points, but every person's circumstances differ — your actual income, expenses, rates, and timelines will produce a different answer. Use the tool iteratively: start with the defaults, then change one variable at a time to see which factor has the largest impact on your outcome.Formula
Monthly payment = PMT at rate for term. Break-even = fee value ÷ loan sensitivity per bp.
Tips
- If closing within 30 days, locking is usually the safer choice.
- Float only if you have a strong conviction rates will drop AND you can afford the risk.
- Lock fees are sometimes refundable if rates drop — ask your lender.
- Consider a "float-down" option that lets you benefit if rates drop during the lock period.
Frequently asked questions
Should I lock my mortgage rate?
If you are closing within 30 days: yes, lock. If rates are at historical lows: yes, lock. If you expect rates to drop significantly AND closing is 45+ days away: consider floating. Most borrowers benefit from locking.
What is a rate lock float-down?
A float-down provision lets you benefit if rates drop during your lock period. The lender locks your rate but allows one downward adjustment. This costs slightly more but reduces the risk of missing a rate drop.
How accurate are the calculator results?
The math is exact — the same formulas a financial professional would use by hand. The precision of the output depends entirely on how realistic your inputs are. Use your actual numbers rather than estimates when possible. The defaults are reasonable starting points, but your real income, rates, and timeline will produce a different result.