What is a "rate lock period"?

Locking in your Interest Rate

When you're offered a "rate lock" from the lender, it means that you are guaranteed to keep a certain interest rate for a certain number of days for your application process. This prevents you from getting through your whole application process and discovering at the end that your interest rate has gone up.

Rate lock periods can be various lengths of time, anywhere from 15 to 60 days, with the longer spans usually costing more. You can get a longer period for your lock, but in making this choice, will probably have a higher interest rate than you would with a shorter period

Additional Ways to Save on Interest

There are other ways to get a better rate, in addition to opting for a shorter rate lock period. A larger down payment will give you a reduced interest rate, because you will be starting out with more equity. You can pay points to bring down your rate for the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You'll pay more up front, but you'll come out ahead in the end.

The Mortgage Exchange Service LLC can walk you through the pitfalls of getting a mortgage. Give us a call at 703.255-5810.

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