What is a "rate lock period"?

Freezing the Rate

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

Although there are several lengths of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. The lender may agree to hold an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be higher 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 good rate, in addition to agreeing to a shorter rate lock period. A bigger down payment will give you a lower interest rate, because you will be starting out with a good deal of equity. You might opt to pay points to improve your interest rate over the life of the loan, meaning you pay more up front. One strategy that is a good option for some is to pay points to reduce the rate over the term of the loan. You pay more initially, but you will come out ahead, especially if you keep the loan for the full term.

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