What is a "rate lock period"?

Locking in your Interest Rate

When you're promised a "rate lock" from the lender, it means that you are guaranteed to get a set interest rate over a determined period while you work on the application process. This prevents you from working through your whole application process and learning at the end that your interest rate has risen higher.

Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer period typically costing more. The lender will agree to lock in an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to going with a shorter rate lock period, there are more ways you are able to score the lowest rate. A bigger down payment will get you a better interest rate, since you will have a good deal of equity at the start. You can pay points to lower 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 term of the loan. You'll pay more initially, but you will save money, especially if you don't refinance early.

AmeriBest Mortgage can answer questions about rate lock periods and many others. Give us a call: 3217777277.