What is a "rate lock period"?

A rate lock or a rate commitment is a lender's 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 prevents you from going through your whole application process and at the end of it finding out the interest rate has gone up, possibly jeopardizing your purchase or refinance.

A rate lock period can vary in length, and longer ones usually cost more. A lender will agree to "lock in" your interest rate and points for a longer period, say 60 days, but in exchange the rate and/or points will be higher than with a shorter rate lock period.

It is important to remember that if you are purchasing a home, you cannot lock in a rate until you have identified a property. If you lock in your rate and you do not buy that particular home, the lock will not go with you to the next property. Locks are tied to properties, not to borrowers.

And finally, if you do lock in your rate, and rates decline, you generally cannot count on being able to negotiate a better rate with the lender with whom you are locked. Sometimes, if rates have dropped considerably, I can negotiate a better rate, but typically we would need to reapply at a different lender to obtain the lower rate.