What is a "rate lock period"?
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to set a certain interest rate and a certain number of points for you for a certain period of time during your application process. This saves you from going through your whole application process and learning at the end that the interest rate has gotten higher.
While there may be a choice of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. A lender may agree to lock in an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.
Additional Ways to Save on Interest
In addition to choosing a shorter rate lock period, there are more ways you can get the best rate. A bigger down payment will give you a better interest rate, since you will have more equity from the beginning. You could opt to pay points to bring down your rate for the loan term, 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 pay more initially, but you will come out ahead in the end.
Coastal Mortgage Corp. can answer questions about rate lock periods & many others. Give us a call: 504-866-5626.
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