What is a "rate lock period"?
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Lock It In
When you're offered a "rate lock" from a lender, it means that you are guaranteed to keep a particular interest rate over a determined period for the application process. This means your interest rate cannot get higher while you are going through the application process.
While there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are typically more expensive. A lending institution may agree to lock in an interest rate and points for a longer span of time, such as 60 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 good rate, besides going with a shorter rate lock period. The bigger down payment you pay, the lower the rate will be, as you will have more equity from the start. You can pay points to lower your rate for the loan term, meaning you pay more initially. One strategy that is a good option for many people is to pay points to reduce the rate over the life of the loan. You will pay more up front, but you'll save money, especially if you don't refinance early.
Miles Funding, LLC can answer questions about rate lock periods and many others. Call us: 915-691-9072.