What is a "rate lock period"?

Locking in your Interest Rate

A rate "lock" or "commitment" is a promise from the lender to lock in a specific interest rate and a specific number of points for you for a certain period during your application process. This saves you from working through your entire application process and discovering at the end that your interest rate has gone up.

Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer spans usually costing more. You can get a longer period for your lock, but in choosing this option, will probably have a higher rate than you would have with a shorter rate lock span of time

Other Interest Saving Strategies

There are other ways to get a better rate, besides choosing a shorter rate lock period. The larger down payment you make, the smaller your interest rate will be, since you will be entering the loan with more equity. You can pay points to bring down your rate over the loan term, meaning you pay more initially. One strategy that is a good option for many people is to pay points to improve the interest rate over the term of the loan. You'll pay more initially, but you will save money, especially if you keep the loan for a long time.

Atlantic Financial Services can walk you through the pitfalls of getting a mortgage. Give us a call: (732) 969-9300.

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