What is a "rate lock period"?
Lock It In
When you are promised a "rate lock" from a lender, it means that you are guaranteed to get a particular interest rate for a certain number of days for the application process. This means your interest rate can't rise during the application process.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer ones generally costing more. A lending institution will agree to freeze an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
More Ways to Save on Interest
In addition to choosing the shorter rate lock period, there are more ways you can attain the best rate. The bigger down payment you pay, the better your rate will be, as you will have more equity from the start. You may opt to pay points to lower your rate for the term of the loan, meaning you pay more up front. One strategy that is a good option for some is to pay points to bring the rate down over the life of the loan. You are paying more initially, but you will come out ahead in the end.
At Ward Kilduff Mortgage, we answer questions about this process every day. Call us: (860) 658-7100.
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