What is a "rate lock period"?

Lock It In

A rate "lock" or "commitment" is a lender's promise to freeze a particular interest rate and a specific number of points for you for a certain period of time while your application is processed. This saves you from going through your entire application process and discovering at the end that your interest rate has risen higher.

Rate lock periods can vary in length, between 15 to 60 days, with the longer period generally costing more. You can get a longer period for your lock, but in doing so, will most likely have a higher interest rate than you would with a shorter rate lock period

More Ways to Save on Interest

There are more ways to get a good rate, besides choosing a shorter rate lock period. A larger down payment will give you a lower interest rate, since you'll be starting out with more equity. You can pay points to bring down your rate over the term of the loan, 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 will save money, especially if you keep the loan for the full term.

At American Commerce Mortgage, we answer questions about this process every day. Call us: 714-970-9700.

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