What is a "rate lock period"?
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What is a Rate Lock?
When you are promised a "rate lock" from your lender, it means that you are guaranteed to get a particular interest rate over a determined period for the application process. This protects you from working through your entire application process and learning at the end that the interest rate has risen higher.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer period generally costing more. You can get a longer period for your lock, but in making this choice, will likely have a higher interest rate than you would with a shorter rate lock span of time
Other Ways to Save on Interest
There are other ways to get a reduced rate, in addition to agreeing to a shorter rate lock period. A bigger down payment will result in a reduced interest rate, because you'll have a good deal of equity from the beginning. You can pay points to improve your rate over the loan term, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to improve the interest rate over the life of the loan. You'll pay more up front, but you'll save money in the end.
Lonny Andrews can walk you through the pitfalls of getting a mortgage. Call us at 916-821-7884.