What is a "rate lock period"?
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What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to freeze a specific interest rate and a particular number of points for you for a specified period of time during your application process. This protects you from getting through your entire application process and finding out at the end that the interest rate has gotten higher.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer spans usually costing more. A lender will agree to freeze an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.
Other Ways to Save on Interest
In addition to opting for the shorter lock period, there are several ways you may be able to get the lowest rate. A bigger down payment will give you a better interest rate, because you're starting out with more equity. You could opt to pay points to bring down your interest rate for the life of the loan, meaning you pay more up front. One strategy that is a good option for some is to pay points to bring the rate down over the term of the loan. You'll pay more initially, but you'll come out ahead, especially if you don't refinance early.
First American Financial can walk you through the pitfalls of getting a mortgage. Give us a call at 770-270-9044.