What is a "rate lock period"?

What is a Rate Lock?

When you are offered a "rate lock" from a lender, it means that you are guaranteed to keep a certain interest rate over a certain number of days for the application process. This means your interest rate can't grow during the application process.

While there are several lengths of rate lock periods (from 15 to 60 days), the longer spans are usually more expensive. The lending institution will 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 that of a rate lock of a shorter period.

Other Interest Saving Strategies

There are more ways to get a reduced rate, besides opting for a shorter rate lock period. The bigger down payment you can make, the lower the interest rate will be, since you will be entering the loan with more equity. You can pay points to bring down your interest rate over the term of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you will save money, especially if you keep the loan for the full term.

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