What is a "rate lock period"?

Locking in your Interest Rate

When you are promised a "rate lock" from the lender, it means that you are guaranteed to keep a particular interest rate for a certain number of days for the application process. This ensures that your interest rate won't go up during the application process.

Rate lock periods can vary in length, between 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 span of time, say sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

Other Interest Saving Strategies

In addition to choosing the shorter lock period, there are more ways you can attain the best rate. The larger down payment you can pay, the lower the rate will be, since you will have more equity from the start. You can pay points to reduce your interest rate for the life of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to improve the rate over the life of the loan. You are paying more initially, but you'll come out ahead in the end.

Forum Mortgage Bancorp can answer questions about rate lock periods & many others. Call us: (773) 774-9040 Ext 121.

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