What is a "rate lock period"?

Locking It In

A rate "lock" or "commitment" is a lender's promise to set a particular interest rate and a specific number of points for you for a specified period while your application is processed. This protects you from going through your entire application process and discovering at the end that your interest rate has risen higher.

Although there are several lengths of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. The lending institution may agree to hold an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.

Other Ways to Save on Interest

In addition to opting for a shorter lock period, there are other ways you are able to attain the lowest rate. The more the down payment, the smaller the rate will be, because you will have more equity from the start. You may choose to pay points to lower your rate for the loan term, 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 pay more initially, but you will come out ahead in the long run.

At Riviera Funding, we answer questions about this process every day. Give us a call: (310) 373-7406.

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