What is a "rate lock period"?
Locking It In
A rate "lock" or "commitment" is a lender's promise to set a particular interest rate and a specific number of points for you for a certain period during your application process. This means your interest rate will not grow as you are working through the application process.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer period usually costing more. You can get a longer period for your lock, but in doing so, will likely have a higher rate than you would with a shorter rate lock period
More Ways to Save on Interest
In addition to going with the shorter lock period, there are more ways you can attain the lowest rate. A bigger down payment will get you a reduced interest rate, since you will have a good deal of equity at the start. You can pay points to reduce your rate for the term of the loan, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You pay more initially, but you will save money, especially if you keep the loan for the full term.
At Executive Lending Group, LLC, we answer questions about this process every day. Give us a call at (816) 525-8000.
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