What is a "rate lock period"?
Locking in your Interest Rate
When you are offered a "rate lock" from the lender, it means that you are guaranteed to keep a certain interest rate over a determined period while you work on the application process. This saves you from going through your whole application process and learning at the end that the interest rate has gone up.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer ones usually costing more. You can get a longer period for your lock, but in making this choice, will likely have a higher rate than you would with a shorter rate lock span of time
Other Ways to Save on Interest
In addition to going with the shorter lock period, there are other ways you may be able to attain the best rate. A bigger down payment will get you a reduced interest rate, because you'll have a good amount of equity at the start. You may choose to pay points to lower your interest rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to reduce the interest rate over the term of the loan. You'll pay more up front, but you will save money, especially if you keep the loan for a long time.
At F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org), we answer questions about this process every day. Call us at 214-300-8756.