What is a "rate lock period"?
Freezing the Rate
When you're promised a "rate lock" from your lender, it means that you are guaranteed to get a specific interest rate over a determined period for the application process. This protects you from working through your whole application process and finding out at the end that your 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. The lending institution can agree to freeze 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 Interest Saving Strategies
There are more ways to get a good rate, in addition to agreeing to a shorter rate lock period. A larger down payment will give you a lower interest rate, since you'll be starting out with a good deal of equity. You can pay points to improve your rate over the term of the loan, meaning you pay more initially. For a lot of people, this is a good option..
Ward Kilduff Mortgage can answer questions about rate lock periods & many others. Give us a call: (860) 658-7100.
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