What is a "rate lock period"?
Locking It In
When you are offered a "rate lock" from your lender, it means that you are guaranteed to get a certain interest rate for a certain number of days while you work on your application process. This keeps you from going through your entire application process and finding out at the end that your interest rate has gotten higher.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer spans generally costing more. The lender may agree to freeze an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of fewer days.
More Ways to Save on Interest
There are other ways to get a lower rate, in addition to opting for a shorter rate lock period. A larger down payment will result in a reduced interest rate, since you will have more equity from the beginning. You might opt to pay points to improve your rate for the loan term, meaning you pay more initially. One strategy that is a good option for some is to pay points to reduce the interest rate over the term of the loan. You'll pay more initially, but you'll save money, especially if you keep the loan for a long time.
Executive Lending Group, LLC can answer questions about rate lock periods and many others. Call us at 8165258000.
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