What is a "rate lock period"?

Lock It In

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

Rate lock periods can vary in length, between 15 to 60 days, with the longer ones usually costing more. The lending institution will agree to freeze an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

More Ways to Save on Interest

There are other ways to get a good rate, in addition to opting for a shorter rate lock period. A larger down payment will get you a reduced interest rate, because you will have more equity at the start. You could choose to pay points to lower your rate over the loan term, 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'll pay more initially, but you'll save money in the long run.

First Community Bank of Central Al. can answer questions about rate lock periods and many others. Call us at (334) 285-8850.

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