What is a "rate lock period"?

Locking It In

When you're offered a "rate lock" from the lender, it means that you are guaranteed to keep a certain interest rate over a certain number of days while you work on the application process. This ensures that your interest rate can't rise during the application process.

While there can be a choice of rate lock periods (from 15 to 60 days), the longer spans are usually more expensive. A lender will agree to hold an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Additional Ways to Save on Interest

There are more ways to get a reduced rate, in addition to choosing a shorter rate lock period. The bigger the down payment, the smaller the interest rate will be, as you will be starting with more equity. You may opt to pay points to lower your interest rate over the loan term, meaning you pay more up front. One strategy that is a good option for many people is to pay points to reduce the rate over the life of the loan. You'll pay more up front, but you will come out ahead in the long run.

At Custom Lending Group, we answer questions about this process every day. Give us a call at (707) 252-2700.

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