What is a "rate lock period"?
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Freezing the Rate
When you're offered a "rate lock" from a lender, it means that you are guaranteed to get a set interest rate for a determined period while you work on your application process. This prevents you from working through your entire application process and learning at the end that the interest rate has risen higher.
Although there might be a choice of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. You can get a longer period for your lock, but in doing so, will most likely have a higher rate than you would have with a shorter rate lock period
Other Interest Saving Strategies
There are other ways to get a good rate, besides going with a shorter rate lock period. The bigger the down payment, the better the interest rate will be, since you will be entering the loan with more equity. You could choose to pay points to improve your rate for the life of the loan, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to reduce the rate over the life of the loan. You pay more up front, but you will save money, especially if you don't refinance early.
At Mortgage X-Change, we answer questions about this process every day. Give us a call at 214-383-9400.