What is a "rate lock period"?

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to set a particular interest rate and a specific number of points for you for a specified period during your application process. This ensures that your interest rate can't get higher as you are working through the application process.

While there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are typically more expensive. A lending institution can 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 fewer days.

Other Interest Saving Strategies

There are other ways to get a reduced rate, besides agreeing to a shorter rate lock period. A bigger down payment will get you a better interest rate, because you'll have a good deal of equity from the beginning. 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 improve the interest rate over the life of the loan. You'll pay more up front, but you'll save money, especially if you don't refinance early.

Financial Edge Mortgage Corp. can answer questions about rate lock periods and many others. Call us: 425-508-9988.