What is a "rate lock period"?
What is a Rate Lock?
A rate "lock" or "commitment" is a lender's promise to set a particular interest rate and a specific number of points for you for a specified period of time while your application is processed. This ensures that your interest rate can't rise while you are working through the application process.
Rate lock periods can vary in length, between fifteen to sixty days, with the longer period typically costing more. The lender may agree to freeze an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of a shorter period.
Other Interest Saving Strategies
There are other ways to get a reduced rate, in addition to going with a shorter rate lock period. A bigger down payment will result in a reduced interest rate, since you will be starting out with a good deal of equity. You can pay points to reduce your interest rate for the loan term, meaning you pay more up front. For many people, this is a good option..
Prime Capital Mortgage Corp can answer questions about rate lock periods and many others. Give us a call: 248-644-1200.
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