What is a "rate lock period"?
Locking It In
When you're promised a "rate lock" from a lender, it means that you are guaranteed to keep a particular interest rate for a certain number of days for your application process. This protects you from going through your whole application process and learning at the end that your interest rate has risen higher.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer spans generally costing more. The lender can agree to freeze 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 that of a rate lock of fewer days.
Other Interest Saving Strategies
There are other ways to get a reduced rate, in addition to going with a shorter rate lock period. A larger down payment will give you a better interest rate, since you will have a good amount of equity from the beginning. You may opt to pay points to improve your rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for many people is to pay points to bring the rate down over the life of the loan. You'll pay more initially, but you'll come out ahead in the long run.
Saab Mortgage can answer questions about rate lock periods & many others. Give us a call at 703-288-0777.
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