What is a "rate lock period"?

Locking in your Interest 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 while your application is processed. This prevents you from going through your whole application process and finding out at the end that the interest rate has gotten higher.

Although there are various lengths of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. The lending institution will agree to lock in an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.

Other Ways to Save on Interest

In addition to choosing a shorter lock period, there are other ways you can score the lowest rate. A larger down payment will get you a reduced interest rate, since you'll have a good amount of equity at the start. You may choose to pay points to improve your interest rate over the term of the loan, meaning you pay more up front. One strategy that is a good option for some is to pay points to reduce the rate over the life of the loan. You'll pay more up front, but you'll come out ahead in the end.

AccessOne Mortgage can answer questions about rate lock periods and many others. Give us a call: 919-787-6080.