What is a "rate lock period"?
Freezing the Rate
When you are offered a "rate lock" from a lender, it means that you are guaranteed to get a certain interest rate over a determined period for the application process. This ensures that your interest rate will not get higher as you are going through the application process.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer ones usually costing more. You can get a longer period for your lock, but in making this choice, will likely have a higher rate than you would have with a shorter period
Other Interest Saving Strategies
In addition to choosing the shorter lock period, there are more ways you can attain the lowest rate. A larger down payment will give you a reduced interest rate, since you will have a good amount of equity at the start. You can pay points to reduce your interest rate for the loan term, meaning you pay more initially. One strategy that is a good option for many people is to pay points to reduce the rate over the term of the loan. You'll pay more initially, but you'll save money, especially if you keep the loan for the full term.
At C2 Financial Corporation, we answer questions about this process every day. Give us a call at (727) 478-2797.
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