What is a "rate lock period"?

Freezing the Rate

When you are promised a "rate lock" from your lender, it means that you are guaranteed to get a certain interest rate over a certain number of days while you work on your application process. This means your interest rate will not go up during the application process.

Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones typically costing more. A lender will agree to hold an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to choosing the shorter rate lock period, there are several ways you can attain the lowest rate. A bigger down payment will give you a lower interest rate, since you'll be starting out with more equity. You can pay points to reduce your rate for the loan term, meaning you pay more up front. One strategy that is a good option for many people is to pay points to improve the interest rate over the life of the loan. You are paying more up front, but you will come out ahead, especially if you don't refinance early.

First Southeast Mortgage Corporation can answer questions about rate lock periods & many others. Call us at 954.920.9799.

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