Mortgage rate lock expiration

Factual Questions
1

Let’s say you apply for a mortgage and lock the rate. The closing on the property is postponed because the seller doesn’t have a permanent certificate of occupancy and has to finish work on the property. This pushes the closing to later than the lock expiration. The loan is approved and the bank is OK with postponing the closing.

What typically happens to the loan rate after the lock expires? It is automatically assumed to start floating? Or does the rate stay the same as when locked?

How does the scenario differ if the rates go up vs. down after the lock expires?

The reason I ask is because I’m in this situation. The lock has expired and rates have gone down. Everyone has been talking as though our rate is the same as when it was locked. But we didn’t explicitly get a new lock.

I’m going to ask the lender for a lower rate. But before I talk with them I’m interested in knowing how these things are typically handled.

2

I can’t speak for current policies, but about twenty years ago when I bought my first house I had something similar happen. The closing was supposed to be in late August but a number of different factors kept delaying it. We ended up not closing until December, during which time the original mortgage lock had expired. Rates had gone down and the bank just wrote up a new set of loan documents at the lower rate. (During the delay I also came into some extra money which the bank let me add to the down payment, so I really came out ahead on the deal.

Talk to the bank and see what their policy is. There’s a good chance they’ll be willing to accommodate you.