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 set interest rate over a certain number of days while you work on your application process. This ensures that your interest rate won't get higher as you are working through the application process.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer spans usually costing more. The lending institution will agree to freeze 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.
Other Interest Saving Strategies
There are more ways to get a low rate, besides going with a shorter rate lock period. A bigger down payment will give you a reduced interest rate, because you will be starting out with more equity. You can pay points to reduce your rate over the loan term, meaning you pay more up front. To many people, this makes sense and is a good deal..
At Alternative Mortgage Group, we answer questions about this process every day. Give us a call at 561-395-4264.