What is a "rate lock period"?
Locking in your Interest Rate
A rate "lock" or "commitment" is a lender's promise to freeze a particular interest rate and a certain number of points for you for a specified period during your application process. This saves you from getting through your entire application process and finding out at the end that your interest rate has gotten higher.
Although there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. You can get a longer period for your lock, but in doing so, will most likely have a higher interest rate than you would have with a shorter rate lock span of time
Other Interest Saving Strategies
There are more ways to get a better rate, besides going with a shorter rate lock period. A larger down payment will get you a lower interest rate, because you'll have more equity from the beginning. You can pay points to lower your interest rate over the term of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to reduce the rate over the life of the loan. You'll pay more up front, but you will come out ahead, especially if you keep the loan for the full term.
Ward Kilduff Mortgage can walk you through the pitfalls of getting a mortgage. Call us: (860) 658-7100.
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