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 keep a set interest rate over a determined period for your application process. This means your interest rate will not go up as you are going through the application process.

Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer period typically costing more. A lending institution may agree to freeze 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.

More Ways to Save on Interest

There are more ways to get a reduced rate, besides opting for a shorter rate lock period. A larger down payment will result in a better interest rate, since you're starting out with more equity. You can pay points to lower your rate for the term of the loan, meaning you pay more initially. One strategy that is a good option for many people is to pay points to bring the rate down over the term of the loan. You'll pay more initially, but you will come out ahead, especially if you keep the loan for the full term.

New Millennium Mortgage Co. NMLS: 331173 can walk you through the pitfalls of getting a mortgage. Call us: (941) 366-5800.