What is a "rate lock period"?
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Lock It In
When you're offered a "rate lock" from the lender, it means that you are guaranteed to get a specific interest rate for a determined period for the application process. This saves you from working through your whole application process and discovering at the end that the interest rate has gotten higher.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer ones typically costing more. A lending institution can agree to hold an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
Other Ways to Save on Interest
In addition to opting for a shorter rate lock period, there are more ways you can attain the lowest rate. A bigger down payment will get you a better interest rate, since you will have a good amount of equity from the beginning. You might opt to pay points to improve your interest rate for the term of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to improve the interest rate over the life of the loan. You are paying more up front, but you'll come out ahead in the end.
Affordable Mortgage Financing, LLC. can answer questions about rate lock periods & many others. Call us at (608) 372-9222.