What is a "rate lock period"?
Locking in your Interest Rate
A rate "lock" or "commitment" is a promise from the lender to lock in a specific interest rate and a particular number of points for you for a specified period during your application process. This keeps you from going through your whole application process and finding out at the end that the interest rate has gone up.
Although there are several lengths 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 making this choice, will most likely have a higher interest rate than you would have with a shorter rate lock period
More Ways to Get a Great Interest Rate
There are other ways to get a lower rate, besides choosing 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 beginning. You can pay points to improve your rate over the term of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You pay more up front, but you will come out ahead in the long run.
Contemporary Mortgage Services, Inc can walk you through the pitfalls of getting a mortgage. Call us: 407-834-3377.
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