What is a "rate lock period"?
Lock It In
When you're promised a "rate lock" from a lender, it means that you are guaranteed to keep a particular interest rate over a determined period while you work on the application process. This prevents you from working through your entire application process and discovering at the end that the interest rate has gone up.
Although there can be a choice of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. A lending institution will 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 with a rate lock of a shorter period.
Additional Ways to Save on Interest
There are other ways to get a reduced rate, besides agreeing to a shorter rate lock period. The bigger down payment you pay, the better the interest rate will be, as you will be entering the loan with more equity. You could opt to pay points to lower your interest rate for the loan term, meaning you pay more up front. To many people, this makes sense and is a good deal..
Carter Financial Solutions can answer questions about rate lock periods & many others. Call us at 8668408745.