What is a "rate lock period"?

Lock It In

A rate "lock" or "commitment" is a promise from the lender to lock in a certain interest rate and a specific number of points for you for a certain period while your application is processed. This protects you from going through your entire application process and learning at the end that your interest rate has risen higher.

Rate lock periods can vary in length, between 15 to 60 days, with the longer spans usually costing more. The lending institution may agree to freeze an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.

More Ways to Save on Interest

In addition to choosing a shorter lock period, there are other ways you can get the lowest rate. The more the down payment, the lower the interest rate will be, since you will have more equity from the start. You can pay points to bring down your interest rate for the loan term, meaning you pay more initially. One strategy that is a good option for some is to pay points to reduce the interest rate over the life of the loan. You'll pay more initially, but you will come out ahead, especially if you keep the loan for a long time.

At Avalon Mortgage Services, Inc., we answer questions about this process every day. Call us: (708) 403-5181.

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