What is a "rate lock period"?

Freezing the Rate

A rate "lock" or "commitment" is a lender's promise to lock in a specific interest rate and a particular number of points for you for a certain period of time during your application process. This prevents you from getting through your whole application process and finding out at the end that the interest rate has gotten higher.

Although there can be a choice of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. You can get a longer period for your lock, but in doing so, will probably have a higher rate than you would with a shorter rate lock period

More Ways to Get a Great Interest Rate

There are more ways to get a reduced rate, in addition to going with a shorter rate lock period. A bigger down payment will result in a reduced interest rate, since you'll be starting out with more equity. You could choose to pay points to lower your rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You will pay more initially, but you'll come out ahead in the long run.

At Harbor View Lending* a DBA of Megastar Financial, we answer questions about this process every day. Give us a call: (207) 571-8034.