What is a "rate lock period"?

What is a Rate Lock?

A rate "lock" or "commitment" is a promise from the lender to freeze a particular interest rate and a particular number of points for you for a certain period during your application process. This means your interest rate can't go up as you are working through the application process.

Rate lock periods can vary in length, between fifteen to sixty days, with the longer period typically costing more. The lending institution will agree to lock in an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

Other Interest Saving Strategies

There are more ways to get a low rate, besides agreeing to a shorter rate lock period. A bigger down payment will result in a better interest rate, because you'll have a good amount of equity at the start. You can pay points to lower 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 bring the rate down over the term of the loan. You will pay more initially, but you will come out ahead in the long run.

American Mortgage Advisers, Inc can walk you through the pitfalls of getting a mortgage. Call us at 2147390569.