What is a "rate lock period"?
Locking in your Interest Rate
When you're offered a "rate lock" from a lender, it means that you are guaranteed to get a set interest rate for a determined period while you work on the application process. This keeps you from going through your entire application process and learning at the end that your interest rate has risen higher.
Rate lock periods can vary in length, between 15 to 60 days, with the longer ones usually costing more. A lending institution can agree to hold an interest rate and points for a longer span of time, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of fewer days.
Other Ways to Save on Interest
In addition to opting for a shorter lock period, there are several ways you can score the best rate. A larger down payment will get you a lower interest rate, because you are starting out with a good deal of equity. You can pay points to improve your interest rate over the term of the loan, meaning you pay more initially. To a lot of people, this makes financial sense..
At Coastal Mortgage Corp., we answer questions about this process every day. Call us at 504-866-5626.
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