What is a "rate lock period"?

Lock It In

A rate "lock" or "commitment" is a promise from the lender to set a specific interest rate and a certain number of points for you for a certain period while your application is processed. This saves you from going through your entire application process and discovering at the end that the interest rate has gotten higher.

Although there are various lengths of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. The lending institution can agree to lock in 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 with a rate lock of fewer days.

More Ways to Get a Great Interest Rate

In addition to going with the shorter lock period, there are other ways you can score the best rate. A bigger down payment will get you a reduced interest rate, because you will have a good deal of equity at the start. You can pay points to lower your rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to improve the interest rate over the life of the loan. You pay more up front, but you'll come out ahead, especially if you keep the loan for a long time.

At Stepping Stone Mortgage, we answer questions about this process every day. Call us at 5416833300.