What is a "rate lock period"?

Locking It In

When you are promised a "rate lock" from a lender, it means that you are guaranteed to get a set interest rate over a certain number of days while you work on the application process. This means your interest rate can't get higher while you are working through the application process.

Although there are several lengths of rate lock periods (from 15 to 60 days), the extended spans are usually more expensive. A lending institution may agree to hold 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 that of a rate lock of fewer days.

More Ways to Get a Great Interest Rate

There are other ways to get a low rate, besides choosing a shorter rate lock period. A bigger down payment will get you a lower interest rate, since you will be starting out with a good deal of equity. You could opt to pay points to improve your rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to improve the rate over the term of the loan. You'll pay more up front, but you'll come out ahead in the long run.

At F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org), we answer questions about this process every day. Give us a call at 214-300-8756.