What is a "rate lock period"? How can you make sure your rate is low?

A rate lock or a rate commitment is a our promise to hold a certain interest rate and a certain number of points for you for a specified period of time while your application is processed. This allows you the comfort of knowing what your rate will be at close and protects you from market fluctuations.

A rate lock period can vary in length; the typical rate lock period is 30 days, but can be much longer 45, 60, 90, 120 days etc.  The trade off is the longer the rate lock period the higher the cost either in points or interest rate.

Other ways besides opting for a shorter rate lock period to get a lower rate is a larger down payments or discount points.  If you put more down it lowers the risk and therefore has a better rate.  If you pay discount points you are paying a fee up front to the investor is exchange for the reduction in rate.  This makes sense for most people if you they are planning on being in the home for a long period of time.

Finally and most importantly, the interest rate you are offered depends on your credit score and your debt-to-income ratio. If you have good credit and your income far exceeds your debt obligations, you will qualify for a lower rate.