What is a "rate lock period"?

What is a Rate Lock?

When you're offered a "rate lock" from the lender, it means that you are guaranteed to get a set interest rate for a determined period while you work on the application process. This protects you from getting through your whole application process and finding out 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 typically costing more. You can get a longer period for your lock, but in making this choice, will likely have a higher interest rate than you would with a shorter period

Other Interest Saving Strategies

There are more ways to get a low rate, besides going with a shorter rate lock period. The larger down payment you can pay, the better the rate will be, as you will have more equity from the start. You might choose to pay points to bring down your interest rate for the loan term, meaning you pay more initially. 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 initially, but you will save money, especially if you keep the loan for a long time.

At Channel Mortgage LLC, we answer questions about this process every day. Give us a call at (718) 639-9500.

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