What is a "rate lock period"?

Locking It In

A rate "lock" or "commitment" is a lender's promise to lock in a certain interest rate and a particular number of points for you for a specified period during your application process. This ensures that your interest rate cannot rise while you are working through the application process.

Although there may be a choice of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. The lender 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 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. The bigger down payment you can make, the better your rate will be, as you will be starting with more equity. You could choose to pay points to reduce your rate over the loan term, meaning you pay more up front. One strategy that is a good option for some is to pay points to reduce the rate over the life of the loan. You'll pay more up front, but you will save money, especially if you keep the loan for the full term.

At Pioneer Mortgage Corp, we answer questions about this process every day. Give us a call at 781-245-4924.