What is a "rate lock period"?

Freezing the Rate

When you're offered a "rate lock" from the lender, it means that you are guaranteed to get a particular interest rate over a certain number of days for your application process. This ensures that your interest rate won't go up as you are going through the application process.

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

More Ways to Get a Great Interest Rate

In addition to opting for the shorter rate lock period, there are more ways you can get the lowest rate. The more the down payment, the lower the interest rate will be, as you will have more equity from the beginning. You could choose to pay points to reduce your interest rate over the term of the loan, meaning you pay more up front. For many people, this makes financial sense..

At First Community Bank of Central Al., we answer questions about this process every day. Call us at (334) 285-8850.

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