What is a "rate lock period"?
Locking It In
When you are promised a "rate lock" from a lender, it means that you are guaranteed to get a particular interest rate over a determined period while you work on the application process. This ensures that your interest rate won't rise while you are working through the application process.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer period typically costing more. You can get a longer period for your lock, but in choosing this option, will most likely have a higher rate than you would with a shorter rate lock span of time
Other Interest Saving Strategies
There are more ways to get a reduced rate, besides agreeing to a shorter rate lock period. The bigger the down payment, the better the interest rate will be, as you will have more equity from the start. You could choose 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 reduce the rate over the term of the loan. You will pay more up front, but you will come out ahead, especially if you keep the loan for a long time.
At Real Property Finance, we answer questions about this process every day. Give us a call: 310-379-5997.
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