What is a "rate lock period"?

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Locking It In

When you're offered a "rate lock" from your lender, it means that you are guaranteed to keep a specific interest rate over a certain number of days for your application process. This means your interest rate cannot get higher while you are working through the application process.

Although there may be a choice of rate lock periods (from 15 to 60 days), the extended spans are typically more expensive. The lending institution will agree to hold an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.

More Ways to Get a Great Interest Rate

There are other ways to get a lower rate, besides agreeing to a shorter rate lock period. The more the down payment, the better the rate will be, because you will have more equity from the start. You could opt to pay points to reduce your rate for the life of the loan, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You will pay more up front, but you will save money in the end.

At Steve Whittaker, we answer questions about this process every day. Give us a call at 8007903317.