What is a "rate lock period"?
Locking in your Interest Rate
When you are promised a "rate lock" from your lender, it means that you are guaranteed to get a specific interest rate over a determined period while you work on the application process. This prevents you from working through your entire application process and finding out at the end that the interest rate has risen higher.
Although there might be a choice of rate lock periods (from 15 to 60 days), the longer ones are typically more expensive. You can get a longer period for your lock, but in choosing this option, will most likely have a higher interest rate than you would have with a shorter rate lock period
Other Interest Saving Strategies
There are other ways to get a reduced rate, besides opting for a shorter rate lock period. The larger the down payment, the smaller your rate will be, as you will be entering the loan with more equity. You may choose to pay points to bring down your rate over the term of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You pay more initially, but you'll save money, especially if you don't refinance early.
At Financial Edge Mortgage Corp., we answer questions about this process every day. Give us a call: 425-508-9988.
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