What is a "rate lock period"?

Locking in your Interest Rate

When you are offered a "rate lock" from a lender, it means that you are guaranteed to get a specific interest rate over a certain number of days while you work on the application process. This keeps you from going through your whole application process and discovering at the end that the interest rate has risen higher.

Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer ones usually costing more. A lender will agree to hold an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.

Additional Ways to Save on Interest

There are more ways to get a good rate, in addition to agreeing to a shorter rate lock period. The larger the down payment, the lower the interest rate will be, because you will be starting with more equity. You can pay points to lower your interest rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to reduce the interest rate over the life of the loan. You'll pay more initially, but you will come out ahead in the long run.

Hawk Mortgage Group can walk you through the pitfalls of getting a mortgage. Call us at (443) 619-7900.

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