What is a "rate lock period"?

Lock It In

When you're offered a "rate lock" from your lender, it means that you are guaranteed to get a certain interest rate for a certain number of days while you work on your application process. This protects you from going through your entire application process and finding out 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 period usually costing more. A lending institution can agree to freeze an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Other Interest Saving Strategies

There are more ways to get a better rate, in addition to agreeing to a shorter rate lock period. A larger down payment will result in a reduced interest rate, since you will have more equity at the start. You could opt to pay points to improve your rate for the term of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You pay more initially, but you'll come out ahead in the end.

U.S.A. Lending, Inc. can answer questions about rate lock periods & many others. Give us a call: 305-967-7200.