What is a "rate lock period"?

What is a Rate Lock?

When you are offered a "rate lock" from your lender, it means that you are guaranteed to get a certain interest rate for a determined period while you work on your application process. This ensures that your interest rate cannot rise as you are going through the application process.

Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer period usually costing more. A lender can agree to lock in an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to opting for the shorter rate lock period, there are more ways you are able to attain the lowest rate. A bigger down payment will get you a lower interest rate, because you're starting out with more equity. You may opt to pay points to reduce your interest rate for the loan term, meaning you pay more initially. One strategy that is a good option for many people is to pay points to bring the rate down over the term of the loan. You pay more up front, but you will save money, especially if you keep the loan for the full term.

1st Credential Mortgage Inc can answer questions about rate lock periods and many others. Call us: (281) 778-0805.

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