What is a "rate lock period"?
Lock It In
When you are offered a "rate lock" from a lender, it means that you are guaranteed to get a certain interest rate for a certain number of days while you work on your application process. This keeps you from working through your whole application process and learning at the end that your interest rate has gotten higher.
Rate lock periods can vary in length, between fifteen to sixty days, with the longer period usually costing more. The lender will agree to hold an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.
Other Ways to Save on Interest
In addition to opting for the shorter rate lock period, there are several ways you can attain the lowest rate. A bigger down payment will give you a lower interest rate, since you'll have more equity from the beginning. You may opt to pay points to reduce your interest rate for the loan term, meaning you pay more up front. One strategy that is a good option for many people is to pay points to improve the rate over the term of the loan. You will pay more up front, but you'll come out ahead, especially if you don't refinance early.
Savers Home Loans can answer questions about rate lock periods & many others. Call us: (800) 974-0509.