What is a "rate lock period"?

What is a Rate Lock?

A rate "lock" or "commitment" is a lender's promise to freeze a particular interest rate and a specific number of points for you for a certain period of time while your application is processed. This protects you from getting through your entire application process and finding out at the end that the interest rate has risen higher.

Although there might be a choice of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. A lender may agree to lock in an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.

More Ways to Get a Great Interest Rate

There are more ways to get a good rate, besides opting for a shorter rate lock period. The bigger the down payment, the better the interest rate will be, because you will have more equity from the beginning. You can pay points to improve your interest rate over the term of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you will save money, especially if you keep the loan for the full term.

AmeriBest Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call at 3217777277.