What is a "rate lock period"?
Freezing the Rate
When you're promised a "rate lock" from a lender, it means that you are guaranteed to keep a particular interest rate over a certain number of days for your application process. This means your interest rate will not grow while you are going through the application process.
While there are various lengths of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. A lender will agree to lock in an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of fewer days.
Other Interest Saving Strategies
There are other ways to get a better rate, in addition to agreeing to a shorter rate lock period. A larger down payment will give you a better interest rate, since you are starting out with a good deal of equity. You could opt to pay points to improve your interest rate for the life of the loan, meaning you pay more initially. One strategy that makes financial sense for some is to pay points to bring the rate down over the term of the loan. You pay more up front, but you will save money, especially if you keep the loan for the full term.
C2 Financial Corporation can answer questions about rate lock periods and many others. Call us at (727) 478-2797.
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