What is a "rate lock period"?

Locking in your Interest Rate

When you are offered a "rate lock" from the lender, it means that you are guaranteed to get a particular interest rate over a determined period for the application process. This ensures that your interest rate will not get higher during the application process.

Although there can be a choice of rate lock periods (from 15 to 60 days), the extended spans are usually more expensive. The lender can agree to freeze 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 Get a Great Interest Rate

There are other ways to get a reduced rate, besides opting for a shorter rate lock period. The more the down payment, the better your interest rate will be, since you will be entering the loan with more equity. You can pay points to reduce your rate over the life of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to improve the interest rate over the life of the loan. You pay more initially, but you'll save money in the long run.

At MortgageZ LLC, we answer questions about this process every day. Call us at 8557558700.

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