What is a "rate lock period"?
What is a Rate Lock?
When you're promised a "rate lock" from the lender, it means that you are guaranteed to get a particular interest rate over a certain number of days for your application process. This saves you from getting through your entire application process and learning at the end that your interest rate has gotten higher.
While there can be a choice of rate lock periods (from 15 to 60 days), the extended ones are generally more expensive. The lender can agree to lock in an interest rate and points for a longer period, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
In addition to opting for the shorter lock period, there are other ways you are able to attain the lowest rate. A larger down payment will get you a lower interest rate, since you will have more equity at the start. You might opt to pay points to reduce your rate for the term of the loan, meaning you pay more up front. To many people, this makes financial sense..
At Crown Mortgage, we answer questions about this process every day. Give us a call at (434) 975-5626.
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