What is a "rate lock period"?
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Locking in your Interest Rate
A rate "lock" or "commitment" is a lender's promise to lock in a particular interest rate and a specific number of points for you for a certain period during your application process. This means your interest rate will not rise as you are going through the application process.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer spans generally costing more. A lending institution can agree to lock in an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.
Other Interest Saving Strategies
There are more ways to get a good rate, besides choosing a shorter rate lock period. The bigger the down payment, the smaller the interest rate will be, since you will be starting with more equity. You can pay points to reduce your interest rate for the loan term, meaning you pay more initially. To a lot of people, this is a good option..
At Dream Home Funding, we answer questions about this process every day. Give us a call at (325) 651-2100.