What is a "rate lock period"?
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Freezing the Rate
A rate "lock" or "commitment" is a promise from the lender to hold a specific interest rate and a specific number of points for you for a certain period while your application is processed. This means your interest rate cannot go up during the application process.
Rate lock periods can be various lengths of time, anywhere from 15 to 60 days, with the longer period generally costing more. A lender may agree to lock in an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
There are other ways to get a reduced rate, in addition to opting for a shorter rate lock period. A larger down payment will get you a lower interest rate, since you will have more equity at the start. You might opt to pay points to improve your rate over the term 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 life of the loan. You will pay more up front, but you'll save money in the end.
Founders Mortgage Inc can answer questions about rate lock periods and many others. Give us a call: 405-418-8545.