What is a "rate lock period"?
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Locking It In
When you are offered a "rate lock" from your lender, it means that you are guaranteed to keep a specific interest rate over a certain number of days while you work on the application process. This prevents you from going through your whole application process and discovering at the end that the interest rate has gotten higher.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer period usually costing more. You can get a longer period for your lock, but in making this choice, will likely have a higher rate than you would have with a shorter rate lock span of time
Other Interest Saving Strategies
There are other ways to get a good rate, besides opting for a shorter rate lock period. The bigger down payment you can pay, the smaller your rate will be, since you will be starting with more equity. You may opt to pay points to improve your rate for the life of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to reduce the interest rate over the term of the loan. You will pay more up front, but you will save money in the end.
At Robert Weaver, Security Mortgage Co., we answer questions about this process every day. Call us: 972.359.7766.