What is a "rate lock period"?

Locking It In

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

Rate lock periods can vary in length, between 15 to 60 days, with the longer period generally costing more. You can get a longer period for your lock, but in doing so, will likely have a higher interest rate than you would have with a shorter rate lock span of time

More Ways to Get a Great Interest Rate

There are more ways to get a better rate, in addition to agreeing to a shorter rate lock period. The bigger the down payment, the lower the interest rate will be, since you will have more equity from the beginning. You could choose to pay points to bring down your rate over the term of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to reduce the rate over the term of the loan. You pay more up front, but you will come out ahead, especially if you don't refinance early.

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

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