What is a "rate lock period"?

What is a Rate Lock?

A rate "lock" or "commitment" is a promise from the lender to lock in a specific interest rate and a particular number of points for you for a certain period during your application process. This saves you from working through your entire application process and discovering at the end that your interest rate has gone up.

Rate lock periods can vary in length, between 15 to 60 days, with the longer spans typically costing more. You can get a longer period for your lock, but in choosing this option, will most likely have a higher interest rate than you would have with a shorter rate lock span of time

More Ways to Get a Great Interest Rate

In addition to opting for a shorter rate lock period, there are other ways you are able to attain the best rate. The bigger down payment you can pay, the smaller the rate will be, since you will have more equity from the beginning. You can pay points to reduce your interest rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to reduce the rate over the term of the loan. You'll pay more initially, but you will save money in the end.

James M. Dix can answer questions about rate lock periods and many others. Give us a call: (317) 288-9434.

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