What is a "rate lock period"?
Locking in your Interest Rate
A rate "lock" or "commitment" is a promise from the lender to set a specific interest rate and a specific number of points for you for a certain period of time while your application is processed. This ensures that your interest rate won't go up while you are going through the application process.
While there are several lengths of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. You can get a longer period for your lock, but in doing so, will most likely have a higher interest rate than you would with a shorter rate lock period
Additional Ways to Save on Interest
There are other ways to get a better rate, besides choosing a shorter rate lock period. The bigger the down payment, the smaller the rate will be, because you will have more equity from the beginning. You can pay points to reduce your interest rate over the term of the loan, meaning you pay more up front. One strategy that is a good option for many people is to pay points to improve the interest rate over the term of the loan. You are paying more initially, but you'll come out ahead, especially if you don't refinance early.
Contemporary Mortgage Services, Inc can answer questions about rate lock periods & many others. Give us a call: 407-834-3377.
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