What is a "rate lock period"?

Freezing the Rate

When you are promised a "rate lock" from the lender, it means that you are guaranteed to keep a certain interest rate over a determined period while you work on the application process. This means your interest rate will not go up during the application process.

While there are various lengths of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. You can get a longer period for your lock, but in choosing this option, will most likely have a higher rate than you would with a shorter rate lock period

Other Interest Saving Strategies

There are more ways to get a good rate, besides agreeing to a shorter rate lock period. The more the down payment, the better the interest rate will be, since you will be starting with more equity. You could choose to pay points to reduce your rate for the term of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You'll pay more up front, but you will save money in the long run.

1st Credential Mortgage Inc can walk you through the pitfalls of getting a mortgage. Call us: (281) 778-0805.

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