What is a "rate lock period"?
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Lock It In
When you're offered a "rate lock" from a lender, it means that you are guaranteed to get a certain interest rate for a determined period while you work on your application process. This keeps you from going through your whole application process and learning at the end that the interest rate has risen higher.
Although there might be a choice of rate lock periods (from 15 to 60 days), the extended ones are usually more expensive. A lending institution will agree to freeze an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
There are more ways to get a lower rate, in addition to agreeing to a shorter rate lock period. A bigger down payment will give you a lower interest rate, because you will be starting out with a good deal of equity. You may opt to pay points to bring down your rate over the life 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 life of the loan. You'll pay more up front, but you will save money, especially if you keep the loan for the full term.
Financial One Mortgage™ can walk you through the pitfalls of getting a mortgage. Call us at (214) 490-7570.