What is a "rate lock period"?
What is a Rate Lock?
When you are promised a "rate lock" from the lender, it means that you are guaranteed to get a particular interest rate over a certain number of days while you work on the application process. This prevents you from going through your entire application process and finding out at the end that your interest rate has gone up.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer spans generally costing more. A lender may agree to freeze an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.
Other Interest Saving Strategies
There are more ways to get a reduced rate, besides going with a shorter rate lock period. The larger down payment you can make, the lower your rate will be, as you will have more equity from the beginning. You may choose to pay points to improve your rate over the term of the loan, meaning you pay more initially. For a lot of people, this makes financial sense..
At Financial Edge Mortgage Corp., we answer questions about this process every day. Call us at 425-508-9988.
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