What is a "rate lock period"?

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Lock It In

A rate "lock" or "commitment" is a promise from the lender to lock in a particular interest rate and a particular number of points for you for a specified period of time while your application is processed. This ensures that your interest rate will not get higher as you are going through the application process.

Although there might be a choice of rate lock periods (from 15 to 60 days), the extended spans are typically more expensive. You can get a longer period for your lock, but in choosing this option, will most likely have a higher rate than you would with a shorter period

More Ways to Save on Interest

In addition to going with the shorter lock period, there are several ways you can get the lowest rate. A bigger down payment will give you a lower interest rate, since you'll have a good amount of equity at the start. You can pay points to reduce your rate for the term of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to improve the rate over the term of the loan. You'll pay more initially, but you'll come out ahead, especially if you keep the loan for a long time.

Southwest Funding can answer questions about rate lock periods and many others. Call us at (504) 832-3131.

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