What is a "rate lock period"?
Freezing the Rate
When you are promised a "rate lock" from your lender, it means that you are guaranteed to get a certain interest rate over a certain number of days while you work on your application process. This saves you from working through your whole application process and discovering at the end that your interest rate has risen higher.
Although there are various lengths of rate lock periods (from 15 to 60 days), the longer spans are generally more expensive. A lending institution may agree to lock in an interest rate and points for a longer period, say sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.
More Ways to Save on Interest
In addition to opting for the shorter rate lock period, there are other ways you are able to score the lowest rate. A bigger down payment will get you a lower interest rate, since you will have more equity at the start. You can pay points to reduce your rate over the term of the loan, meaning you pay more up front. For a lot of people, this is a good option..
Prime Capital Mortgage Corp can walk you through the pitfalls of getting a mortgage. Give us a call at 248-644-1200.
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