What is a "rate lock period"?

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to hold a specific interest rate and a specific number of points for you for a specified period during your application process. This protects you from going through your whole application process and finding out at the end that your interest rate has gone up.

Although there can be a choice of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. A lending institution may agree to lock in an interest rate and points for a longer period, such as sixty 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

In addition to going with the shorter rate lock period, there are more ways you are able to score the lowest rate. A bigger down payment will get you a lower interest rate, because you're starting out with a good deal of equity. You might opt to pay points to bring down your interest rate over the term of the loan, meaning you pay more up front. One strategy that is a good option for many people is to pay points to reduce the interest rate over the term of the loan. You'll pay more initially, but you'll come out ahead, especially if you don't refinance early.

New Millennium Mortgage Co. NMLS: 331173 can answer questions about rate lock periods & many others. Give us a call: (941) 366-5800.