What is a "rate lock period"?
Freezing the Rate
When you are promised a "rate lock" from a lender, it means that you are guaranteed to keep a certain interest rate for a determined period while you work on your application process. This protects you from going through your whole application process and learning at the end that your interest rate has gotten higher.
While there can be a choice of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. The lending institution can agree to lock in an interest rate and points for a longer period, like sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
There are more ways to get a reduced rate, besides opting for a shorter rate lock period. The bigger down payment you make, the lower your interest rate will be, since you will be entering the loan with more equity. You can pay points to improve your rate for the life of the loan, meaning you pay more initially. To a lot of people, this is a good option..
Ward Kilduff Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call at (860) 658-7100.
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