What is a "rate lock period"?

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Lock It In

When you're promised a "rate lock" from the lender, it means that you are guaranteed to get a particular interest rate over a certain number of days while you work on the application process. This keeps you from working through your entire application process and finding out at the end that the interest rate has risen higher.

Although there can be a choice of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. A lender will agree to freeze 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 higher than that of a rate lock of a shorter period.

More Ways to Save on Interest

In addition to opting for the shorter rate lock period, there are other ways you can attain the lowest rate. The more the down payment, the smaller the rate will be, as you will be entering the loan with more equity. You could opt to pay points to lower your interest rate for the term of the loan, meaning you pay more initially. For many people, this is a good option..

At CFC Mortgage Bankers, we answer questions about this process every day. Call us at (805) 432-4898.