What is a "rate lock period"?

Freezing the Rate

A rate "lock" or "commitment" is a promise from the lender to freeze a specific interest rate and a specific number of points for you for a certain period during your application process. This means your interest rate can't rise during the application process.

While there are several lengths of rate lock periods (from 15 to 60 days), the extended spans are typically more expensive. You can get a longer period for your lock, but in choosing this option, will most likely have a higher rate than you would with a shorter period

Other Interest Saving Strategies

In addition to choosing the shorter lock period, there are other ways you can score the best rate. A larger down payment will give you a reduced interest rate, because you will be starting out with a good deal of equity. You could opt to pay points to reduce your interest rate over the term of the loan, meaning you pay more up front. One strategy that is a good option for many people is to pay points to bring the rate down over the life of the loan. You'll pay more up front, but you'll come out ahead in the long run.

Saab Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 7032880777.

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