What is a "rate lock period"?

Locking It In

A rate "lock" or "commitment" is a promise from the lender to hold a specific interest rate and a specific number of points for you for a certain period of time while your application is processed. This keeps you from getting through your whole application process and finding out at the end that your interest rate has gone up.

Although there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are typically more expensive. A lender can agree to freeze an interest rate and points for a longer span of time, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

Other Interest Saving Strategies

There are other ways to get a good rate, besides agreeing to a shorter rate lock period. A bigger down payment will get you a lower interest rate, since you will have a good amount of equity at the start. You can pay points to lower your rate over the loan term, meaning you pay more initially. To many people, this makes financial sense..

Southwest Funding #841 can answer questions about rate lock periods and many others. Call us: (512) 291-6100.

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