What is a "rate lock period"?
Locking It In
When you're offered a "rate lock" from your lender, it means that you are guaranteed to get a certain interest rate for a certain number of days while you work on your application process. This protects you from working through your entire application process and discovering at the end that your interest rate has gone up.
Rate lock periods can be various lengths of time, between 15 to 60 days, with the longer ones usually costing more. The lender will agree to hold an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.
Other Interest Saving Strategies
In addition to choosing the shorter rate lock period, there are more ways you may be able to attain the best rate. The larger down payment you can make, the lower your rate will be, because you will have more equity from the start. You can pay points to reduce your rate for the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you'll save money in the end.
New Millennium Mortgage Co. NMLS: 331173 can walk you through the pitfalls of getting a mortgage. Give us a call at (941) 366-5800.
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