What is a "rate lock period"?
Locking in your Interest Rate
When you're offered a "rate lock" from the lender, it means that you are guaranteed to get a set interest rate for 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 your interest rate has gone up.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer ones usually costing more. You can get a longer period for your lock, but in choosing this option, will probably have a higher interest rate than you would have with a shorter span of time
Other Interest Saving Strategies
There are other ways to get a good rate, in addition to choosing a shorter rate lock period. The bigger the down payment, the lower the interest rate will be, because you will be entering the loan with more equity. You can pay points to reduce your rate over the term of the loan, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to reduce the rate over the life of the loan. You pay more up front, but you will come out ahead in the long run.
At Mario Vega, we answer questions about this process every day. Call us: 877-310-6200.
Get a New Loan Quote
Looking for a new home loan? Fill out the following form to get a fast quote from us.