What is a "rate lock period"?

Locking It In

A rate "lock" or "commitment" is a promise from the lender to set a particular interest rate and a particular number of points for you for a certain period while your application is processed. This ensures that your interest rate won't go up while you are going through the application process.

While there are various lengths of rate lock periods (from 15 to 60 days), the longer ones are generally more expensive. A lending institution 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 that of a rate lock of a shorter period.

Additional Ways to Save on Interest

There are other ways to get a better rate, in addition to agreeing to a shorter rate lock period. A larger down payment will get you a better interest rate, since you'll have more equity at the start. You could choose to pay points to improve 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 improve the interest rate over the life of the loan. You pay more initially, but you will come out ahead in the long run.

Triumph Mortgage Inc can walk you through the pitfalls of getting a mortgage. Call us: 8327302000.

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