When you “lock” an interest rate or an interest rate is “locked” it simply means that a particular interest rate has been secured for a particular amount of time and will not be impacted by future market conditions.
Typical rate lock periods are 30 days but can range from 8 – 180 days.
Two key things to keep in mind here,
1) the longer the interest rate lock period, the higher the interest rate and/or lender fees
For example,
if you lock your interest rate for 30 days your rate will be lower than if you lock it for 90 days.
You can get the same rate on a 90 day lock as you can a 30 day lock, however, your lender fees will be higher on the 90 day lock as you will have to buy down your rate to receive the same interest rate as a 30 day lock.
2) Don’t lock your rate for a longer period than needed.
For example,
if you’re closing in 22 days, lock your rate on a 22 day lock vs a 30 day lock. Reason being is what is mentioned above in #1.
The longer the rate lock period, the higher the rate and/or lender fees.
So, if you’re closing in 22 days, why spend the extra money and/or increase in rate (although very little) when you don’t have to?
