What is a "rate lock period"?

What is a Rate Lock?

A rate "lock" or "commitment" is a lender's promise to lock in a specific interest rate and a certain number of points for you for a certain period of time during your application process. This prevents you from going through your entire application process and finding out at the end that the interest rate has gone up.

While there are various lengths of rate lock periods (from 15 to 60 days), the extended ones are typically more expensive. A lending institution can agree to hold an interest rate and points for a longer period, like 60 days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to choosing the shorter lock period, there are other ways you may be able to attain the lowest rate. The bigger the down payment, the lower your interest rate will be, as you will be starting with more equity. You can pay points to improve your interest 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 improve the rate over the life of the loan. You'll pay more initially, but you will save money in the end.

RE-ProServices can answer questions about rate lock periods & many others. Call us: 6269184592.

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