What is a "rate lock period"?
Lock It In
A rate "lock" or "commitment" is a lender's promise to hold a particular interest rate and a particular number of points for you for a specified period of time during your application process. This prevents you from getting through your entire application process and discovering at the end that your interest rate has risen higher.
Rate lock periods can be various lengths of time, between fifteen to sixty days, with the longer period usually costing more. A lender can 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 that of a rate lock of fewer days.
Other Ways to Save on Interest
There are other ways to get a lower rate, besides choosing a shorter rate lock period. The larger the down payment, the better the 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 is a good option for some is to pay points to improve the rate over the life of the loan. You'll pay more up front, but you will save money, especially if you don't refinance early.
Mario Vega can answer questions about rate lock periods & many others. Call us: 877-310-6200.
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