What is a "rate lock period"?

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What is a Rate Lock?

When you're offered a "rate lock" from the lender, it means that you are guaranteed to get a particular interest rate over a certain number of days while you work on the application process. This means your interest rate will not rise as you are going through the application process.

Although there are various lengths of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. A lender can agree to hold an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.

More Ways to Get a Great Interest Rate

In addition to opting for the shorter lock period, there are more ways you can attain the lowest rate. The larger the down payment, the smaller your rate will be, because you will be entering the loan with more equity. You can pay points to bring down your rate over the term of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to bring the rate down over the life of the loan. You'll pay more up front, but you'll save money, especially if you keep the loan for the full term.

At Mortgage Makers USA, Inc., we answer questions about this process every day. Give us a call: 561-447-9580.