What is a "rate lock period"?

What is a Rate Lock?

A rate "lock" or "commitment" is a promise from the lender to set a certain interest rate and a specific number of points for you for a specified period while your application is processed. This ensures that your interest rate will not get higher during the application process.

Rate lock periods can vary in length, between fifteen to sixty days, with the longer ones generally costing more. A lending institution can agree to hold 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.

More Ways to Save on Interest

In addition to going with the shorter lock period, there are other ways you can get the lowest rate. The more the down payment, the smaller the rate will be, since you will be entering the loan with more equity. You could choose to pay points to improve your interest rate over the life of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to improve the rate over the life of the loan. You are paying more up front, but you will save money in the long run.

At Metro Mortgage, we answer questions about this process every day. Give us a call: 866-300-1550.

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