What is a "rate lock period"?

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to lock in a particular interest rate and a certain number of points for you for a certain period during your application process. This ensures that your interest rate will not go up as you are going through the application process.

Although there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. The lender will agree to hold an interest rate and points for a longer span of time, such as 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

More Ways to Get a Great Interest Rate

There are more ways to get a lower rate, in addition to going with a shorter rate lock period. The bigger down payment you can make, the better the interest rate will be, because you will have more equity from the beginning. You could choose to pay points to improve your rate over the loan term, meaning you pay more up front. One strategy that is a good option 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.

At Executive Lending Group, LLC, we answer questions about this process every day. Give us a call at 8165258000.