What is a "rate lock period"?
Lock It In
When you're promised a "rate lock" from a lender, it means that you are guaranteed to keep a particular interest rate for a certain number of days while you work on your application process. This keeps you from getting through your entire application process and finding out at the end that the interest rate has gone up.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer ones generally costing more. A lender will agree to lock in an interest rate and points for a longer period, say 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
Other Interest Saving Strategies
There are other ways to get a reduced rate, besides opting for a shorter rate lock period. The bigger down payment you can make, the better the interest rate will be, since you will have more equity from the beginning. You might opt to pay points to bring down your interest rate over the life of the loan, meaning you pay more initially. To many people, this makes financial sense..
At Ward Kilduff Mortgage, we answer questions about this process every day. Call us: (860) 658-7100.
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