What is a "rate lock period"?

Locking in your Interest Rate

When you're promised a "rate lock" from a lender, it means that you are guaranteed to keep a specific interest rate for a certain number of days for your application process. This means your interest rate won't rise during the application process.

While there are various lengths of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. The lender will agree to freeze an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

More Ways to Get a Great Interest Rate

In addition to choosing the shorter rate lock period, there are more ways you may be able to attain the best rate. The larger down payment you can make, the smaller your rate will be, since you will be starting with more equity. You may opt to pay points to lower your rate over the term of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to bring the rate down over the term of the loan. You are paying more initially, but you'll save money, especially if you keep the loan for the full term.

Farm Credit of the Virginias can answer questions about rate lock periods and many others. Call us: (800) 919-3276.