What is a "rate lock period"?

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Freezing the Rate

When you are offered a "rate lock" from a lender, it means that you are guaranteed to get a particular interest rate over a determined period for your application process. This saves you from working through your entire application process and learning at the end that the interest rate has risen higher.

Rate lock periods can vary in length, between fifteen to sixty days, with the longer period typically costing more. The lender may agree to lock in an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.

Additional Ways to Save on Interest

In addition to choosing a shorter rate lock period, there are more ways you may be able to get the lowest rate. A larger down payment will result in a reduced interest rate, since you're starting out with a good deal of equity. You might opt to pay points to bring down your rate for the loan term, meaning you pay more initially. To many people, this makes sense and is a good deal..

Eastern Michigan Bank can walk you through the pitfalls of getting a mortgage. Give us a call: 810.679.2500.