What is a "rate lock period"?

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to set a particular interest rate and a certain number of points for you for a specified period of time while your application is processed. This keeps you from working through your whole application process and finding out at the end that the interest rate has gotten higher.

While there are various lengths of rate lock periods (from 15 to 60 days), the extended spans are usually more expensive. A lending institution will agree to lock in an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

More Ways to Get a Great Interest Rate

There are other ways to get a reduced rate, besides opting for a shorter rate lock period. A bigger down payment will give you a better interest rate, because you will have a good deal of equity at the start. You may opt to pay points to reduce your rate for the term of the loan, meaning you pay more initially. For a lot of people, this is a good option..

At U.S.A. Lending, Inc., we answer questions about this process every day. Give us a call at 305-967-7200.