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 get a particular interest rate for a certain number of days for the application process. This saves you from working through your whole application process and finding out at the end that your interest rate has gone up.

Rate lock periods can vary in length, between 15 to 60 days, with the longer ones usually costing more. The lending institution can agree to hold an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

Other Interest Saving Strategies

In addition to choosing the shorter rate lock period, there are other ways you are able to score the lowest rate. The larger down payment you make, the lower your interest rate will be, as you will be entering the loan with more equity. You might choose to pay points to bring down your interest rate for the loan term, meaning you pay more initially. One strategy that is a good option for many people is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you will come out ahead, especially if you keep the loan for the full term.

At American Commerce Mortgage, we answer questions about this process every day. Give us a call at 714-970-9700.

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