What is a "rate lock period"?
What is a Rate Lock?
A rate "lock" or "commitment" is a promise from the lender to set a specific interest rate and a particular number of points for you for a specified period during your application process. This ensures that your interest rate can't get higher during the application process.
Although there are several lengths of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. A lending institution can agree to hold an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.
Other Ways to Save on Interest
There are more ways to get a reduced rate, besides opting for a shorter rate lock period. The larger down payment you pay, the better the interest rate will be, as you will have more equity from the beginning. You can pay points to bring down your rate over the life of the loan, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to reduce the rate over the term of the loan. You pay more initially, but you will come out ahead, especially if you don't refinance early.
At Executive Lending Group, LLC, we answer questions about this process every day. Call us at (816) 525-8000 & (81.
Got a Question?
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.