What is a "rate lock period"?

Locking It In

A rate "lock" or "commitment" is a lender's promise to set a specific interest rate and a specific number of points for you for a specified period of time while your application is processed. This protects you from getting through your entire application process and discovering at the end that your interest rate has risen higher.

Although there might be a choice of rate lock periods (from 15 to 60 days), the extended spans are typically more expensive. A lending institution may agree to hold an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

More Ways to Get a Great Interest Rate

In addition to going with the shorter rate lock period, there are several ways you can score the best rate. A bigger down payment will get you a reduced interest rate, since you will have more equity at the start. You may opt to pay points to bring down your rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You pay more initially, but you will come out ahead in the end.

Boardwalk Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 1-800-606-2794.