What is a "rate lock period"?
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Freezing the Rate
A rate "lock" or "commitment" is a promise from the lender to hold a particular interest rate and a particular number of points for you for a specified period of time during your application process. This means your interest rate cannot go up as you are working through the application process.
Rate lock periods can vary in length, between fifteen to sixty days, with the longer ones typically costing more. The lending institution will agree to lock in an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.
Other Ways to Save on Interest
In addition to opting for the shorter lock period, there are more ways you can attain the best rate. The larger the down payment, the better the rate will be, since you will have more equity from the beginning. You can pay points to bring down your rate for the life of the loan, meaning you pay more up front. One strategy that is a good option for some is to pay points to improve the rate over the term of the loan. You are paying more up front, but you will come out ahead, especially if you keep the loan for the full term.
Mutual Security Mortgage can answer questions about rate lock periods & many others. Give us a call at (303) 931-7879.