What is a "rate lock period"?
Freezing the Rate
When you're promised a "rate lock" from the lender, it means that you are guaranteed to keep a set interest rate over a determined period for your application process. This ensures that your interest rate cannot get higher during the application process.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer ones typically costing more. A lender can 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 higher than that of a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to choosing the shorter rate lock period, there are other ways you can score the best rate. The larger down payment you can pay, the smaller your rate will be, as you will be starting with more equity. You can pay points to reduce your rate over the life of the loan, meaning you pay more up front. For many people, this makes sense and is a good deal..
Savers Home Loans can walk you through the pitfalls of getting a mortgage. Call us: (800) 974-0509.