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What is a "rate lock period"?

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to hold a particular interest rate and a specific number of points for you for a specified period during your application process. This prevents you from getting through your entire application process and discovering at the end that your interest rate has risen higher.

Although there are various lengths of rate lock periods (from 15 to 60 days), the longer ones are generally more expensive. A lender can agree to lock in 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 more than with a rate lock of fewer days.

More Ways to Save on Interest

There are more ways to get a lower rate, besides agreeing to a shorter rate lock period. The bigger down payment you can make, the lower the interest rate will be, as you will be entering the loan with more equity. You can pay points to lower your rate for the term of the loan, meaning you pay more up front. For a lot of people, this makes financial sense..

At Riverside Funding Corp., we answer questions about this process every day. Give us a call at 516-431-2009.

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