What is a "rate lock period"?
What is a Rate Lock?
When you're promised a "rate lock" from the lender, it means that you are guaranteed to get a certain interest rate for a certain number of days while you work on the application process. This keeps you from going through your entire application process and learning at the end that your interest rate has gone up.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer spans usually costing more. A lending institution may agree to lock in 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 a shorter period.
Additional Ways to Save on Interest
There are other ways to get a lower rate, besides opting for a shorter rate lock period. A bigger down payment will give you a reduced interest rate, because you'll be starting out with more equity. You may choose to pay points to reduce your interest rate for the loan term, meaning you pay more initially. For many people, this makes sense and is a good deal..
At Carter Financial Solutions, we answer questions about this process every day. Call us: 866-840-8745 x2.