What is a "rate lock period"?
Freezing the Rate
A rate "lock" or "commitment" is a lender's promise to hold a specific interest rate and a particular number of points for you for a certain period of time during your application process. This means your interest rate can't grow during the application process.
Although there can be a choice of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. The lending institution will agree to hold an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.
Additional Ways to Save on Interest
In addition to opting for a shorter lock period, there are other ways you can get the lowest rate. The larger down payment you can pay, the smaller your interest rate will be, since you will be starting with more equity. You can pay points to lower your interest rate for the term 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 will pay more up front, but you'll save money, especially if you keep the loan for the full term.
Savers Home Loans can walk you through the pitfalls of getting a mortgage. Give us a call at (800) 974-0509.