What is a “rate lock period”?
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Freezing the Rate
When you’re promised a “rate lock” from your lender, it means that you are guaranteed to keep a particular interest rate over a certain number of days while you work on the application process. This keeps you from working through your entire application process and learning at the end that your interest rate has gotten higher.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer spans typically costing more. The lending institution can agree to lock in an interest rate and points for a longer span of time, say 60 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 reduced rate, besides choosing a shorter rate lock period. A larger down payment will give you a lower interest rate, because you will have more equity from the beginning. You can pay points to reduce your interest rate over the loan term, meaning you pay more up front. For a lot of people, this makes sense and is a good deal.