What is a "rate lock period"?
Locking It In
When you are promised a "rate lock" from the lender, it means that you are guaranteed to keep a certain interest rate for a certain number of days while you work on the application process. This ensures that your interest rate will not go up during the application process.
While there are various lengths of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. The 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 more than with a rate lock of fewer days.
Other Interest Saving Strategies
In addition to opting for a shorter lock period, there are more ways you may be able to attain the lowest rate. A bigger down payment will result in a reduced interest rate, since you're starting out with a good deal of equity. You might choose to pay points to bring down your interest rate over the loan term, meaning you pay more initially. One strategy that is a good option for some is to pay points to bring the rate down over the term of the loan. You pay more up front, but you'll come out ahead, especially if you keep the loan for the full term.
Pacific Loan Brokers can walk you through the pitfalls of getting a mortgage. Give us a call at 877-310-6200.
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