What is a "rate lock period"?

Freezing the Rate

When you are offered a "rate lock" from your lender, it means that you are guaranteed to get a specific interest rate for a certain number of days while you work on the application process. This means your interest rate won't grow during the application process.

Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer period generally costing more. The lender may agree to freeze an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

More Ways to Get a Great Interest Rate

In addition to opting for the shorter rate lock period, there are several ways you may be able to get the best rate. The larger down payment you can make, the smaller the interest rate will be, since you will have more equity from the start. You might choose to pay points to reduce your interest rate over the life of the loan, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to reduce the interest rate over the life of the loan. You'll pay more up front, but you'll come out ahead in the end.

La Paz Mortgage can answer questions about rate lock periods & many others. Call us: 9497706067.

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