What is a "rate lock period"?
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to freeze a specific interest rate and a certain number of points for you for a certain period of time while your application is processed. This saves you from getting through your whole application process and learning at the end that the interest rate has gotten higher.
Rate lock periods can be various lengths of time, anywhere from 15 to 60 days, with the longer period generally costing more. The lending institution can agree to lock in an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
There are more ways to get a good rate, besides opting for a shorter rate lock period. The larger down payment you make, the better the interest rate will be, since you will be entering the loan with more equity. You can pay points to improve your rate over the life of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You'll pay more up front, but you'll come out ahead in the long run.
Hancock Mortgage Partners, LLC NMLS# 229844 can answer questions about rate lock periods and many others. Give us a call at 225 819 7670.