What is a "rate lock period"?

Lock It In

When you are promised a "rate lock" from a lender, it means that you are guaranteed to keep a particular interest rate over a certain number of days while you work on the application process. This keeps you from working through your whole application process and discovering at the end that your interest rate has gotten higher.

Although there are several lengths of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. A lending institution will agree to hold an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

Other Interest Saving Strategies

There are other ways to get a reduced rate, besides agreeing to a shorter rate lock period. A larger down payment will get you a better interest rate, since you will have a good amount of equity at the start. You may opt to pay points to improve your interest rate over the life of the loan, meaning you pay more up front. One strategy that is a good option for many people is to pay points to bring the rate down over the term of the loan. You pay more initially, but you will save money in the long run.

At Marshall Lending, we answer questions about this process every day. Call us at 9162758775.

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