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 while your application is processed. This protects you from working through your entire application process and learning at the end that the interest rate has gotten higher.

Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer period usually costing more. A lending institution can agree to lock in an interest rate and points for a longer span of time, such as 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.

Other Ways to Save on Interest

There are other ways to get a good rate, besides choosing a shorter rate lock period. The more the down payment, the better the interest rate will be, because you will be starting with more equity. You could opt to pay points to lower your rate over the term of the loan, meaning you pay more up front. For many people, this is a good option..

At MidTowne Mortgage, we answer questions about this process every day. Call us: (478) 746-2063.

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