What is a "rate lock period"?

Locking It In

When you're offered a "rate lock" from a lender, it means that you are guaranteed to keep a certain interest rate for a certain number of days for your application process. This ensures that your interest rate won't get higher as you are going through the application process.

While there might be a choice of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. The lending institution can agree to lock in an interest rate and points for a longer span of time, like 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.

More Ways to Get a Great Interest Rate

In addition to opting for a shorter rate lock period, there are other ways you are able to get the best rate. The bigger the down payment, the lower the rate will be, since you will be entering the loan with more equity. You might opt to pay points to lower 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 reduce the rate over the life of the loan. You are paying more up front, but you'll save money in the long run.

ADVISORY MORTGAGE can walk you through the pitfalls of getting a mortgage. Give us a call: 8102292820.