What is a "rate lock period"?
What is a Rate Lock?
A rate "lock" or "commitment" is a promise from the lender to hold a certain interest rate and a certain number of points for you for a specified period of time while your application is processed. This means your interest rate can't go up as you are going through the application process.
While there are various lengths of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. You can get a longer period for your lock, but in making this choice, will probably have a higher rate than you would have with a shorter period
More Ways to Get a Great Interest Rate
There are other ways to get a reduced rate, in addition to going with a shorter rate lock period. A larger down payment will get you a better interest rate, because you are starting out with a good deal of equity. You could opt to pay points to lower your interest rate over the life of the loan, meaning you pay more up front. 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'll come out ahead, especially if you don't refinance early.
At Coastal Mortgage Corp., we answer questions about this process every day. Call us: 504-866-5626.
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