What is a "rate lock period"?
Locking It In
A rate "lock" or "commitment" is a promise from the lender to hold a particular interest rate and a specific number of points for you for a specified period of time while your application is processed. This keeps you from working through your whole application process and learning at the end that the interest rate has gotten higher.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer period usually costing more. You can get a longer period for your lock, but in making this choice, will most likely have a higher rate than you would with a shorter rate lock span of time
Other Interest Saving Strategies
There are other ways to get a good rate, in addition to agreeing to a shorter rate lock period. A bigger down payment will result in a better interest rate, because you'll be starting out with more equity. You can pay points to bring down your interest rate over the term of the loan, meaning you pay more initially. One strategy that makes financial sense for many people is to pay points to bring the rate down over the term of the loan. You'll pay more up front, but you'll save money, especially if you keep the loan for the full term.
At Washingtonian Mortgage, LLC, we answer questions about this process every day. Call us at 410-451-2755.