What is a "rate lock period"?

Freezing the Rate

When you are promised a "rate lock" from the lender, it means that you are guaranteed to keep a specific interest rate over a certain number of days while you work on the application process. This means your interest rate cannot get higher during the application process.

Although there might be a choice of rate lock periods (from 15 to 60 days), the extended spans are typically more expensive. The lending institution may agree to lock in an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.

More Ways to Get a Great Interest Rate

In addition to going with a shorter rate lock period, there are other ways you are able to get the lowest rate. A bigger down payment will give you a better interest rate, because you're starting out with more equity. You can pay points to lower your interest rate over the term of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to reduce the rate over the term of the loan. You are paying more initially, but you will save money, especially if you keep the loan for a long time.

At C2 Financial, we answer questions about this process every day. Give us a call: 805-636-9222.