What is a "rate lock period"?

What is a Rate Lock?

A rate "lock" or "commitment" is a lender's promise to hold a specific interest rate and a particular number of points for you for a specified period while your application is processed. This protects you from getting through your entire application process and learning at the end that the interest rate has risen higher.

While there are various lengths of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. The lender can agree to lock in an interest rate and points for a longer period, say 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 Save on Interest

In addition to choosing the shorter rate lock period, there are several ways you may be able to attain the best rate. A larger down payment will give you a reduced interest rate, because you'll have more equity at the start. You can pay points to reduce your rate over the loan term, meaning you pay more up front. 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 come out ahead in the long run.

Stepping Stone Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 5416833300.