What is a "rate lock period"?
Locking It In
A rate "lock" or "commitment" is a promise from the lender to set a certain interest rate and a specific number of points for you for a certain period of time while your application is processed. This ensures that your interest rate can't rise during the application process.
Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer period typically costing more. You can get a longer period for your lock, but in making this choice, will most likely have a higher rate than you would with a shorter rate lock period
More Ways to Get a Great Interest Rate
There are other ways to get a good rate, in addition to opting for a shorter rate lock period. The more the down payment, the better the interest rate will be, as you will be starting with more equity. You may choose to pay points to improve your rate over the life of the loan, 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 term of the loan. You pay more up front, but you'll come out ahead, especially if you don't refinance early.
At Prime Capital Mortgage Corp, we answer questions about this process every day. Call us: 248-644-1200.
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