What is a "rate lock period"?

Lock It In

When you are offered a "rate lock" from your lender, it means that you are guaranteed to keep a particular interest rate for a determined period while you work on your application process. This ensures that your interest rate will not grow during the application process.

Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer ones usually costing more. A lender may agree to freeze an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

More Ways to Save on Interest

In addition to opting for a shorter lock period, there are other ways you are able to get the best rate. The bigger down payment you can make, the lower the interest rate will be, as you will have more equity from the beginning. You can pay points to lower your rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You'll pay more initially, but you will come out ahead in the long run.

James M. Dix can walk you through the pitfalls of getting a mortgage. Call us: (317) 288-9434.

Got a Question?

Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.

Your Information
Your Question