What is a "rate lock period"?

Freezing the Rate

When you are offered a "rate lock" from a lender, it means that you are guaranteed to keep a specific interest rate over a certain number of days for the application process. This protects you from going through your entire application process and learning at the end that the interest rate has risen higher.

While there are several lengths of rate lock periods (from 15 to 60 days), the extended spans are usually more expensive. A lending institution can agree to hold an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Additional Ways to Save on Interest

There are other ways to get a better rate, besides opting for a shorter rate lock period. A bigger down payment will give you a lower interest rate, since you will have a good amount of equity from the beginning. You could opt to pay points to bring down your interest rate over the life of the loan, meaning you pay more up front. For many people, this makes financial sense..

Nationwide Home Loans can walk you through the pitfalls of getting a mortgage. Call us at (562) 693-5048.

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