What is a "rate lock period"?
Locking in your Interest Rate
When you are offered a "rate lock" from a lender, it means that you are guaranteed to get a certain interest rate over a determined period while you work on the application process. This means your interest rate won't get higher as you are working through the application process.
Rate lock periods can vary in length, between fifteen to sixty days, with the longer spans generally costing more. The lending institution will agree to freeze an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
Additional Ways to Save on Interest
In addition to opting for a shorter rate lock period, there are several ways you can attain the lowest rate. The bigger the down payment, the lower your rate will be, as you will have more equity from the beginning. You can pay points to improve your rate for the loan term, 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 up front, but you will save money in the long run.
Savers Home Loans can walk you through the pitfalls of getting a mortgage. Call us at (800) 974-0509.