When you're promised a "rate lock" from your lender, it means that you are guaranteed to keep a specific interest rate over a determined period for the application process. This means your interest rate can't rise as you are working through the application process.
Rate lock periods can vary in length, anywhere from fifteen to sixty days, with the longer period generally costing more. A lending institution will agree to lock in an interest rate and points for a longer period, such as 60 days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.
In addition to opting for the shorter lock period, there are other ways you may be able to score the best rate. The bigger down payment you can make, the smaller the interest rate will be, as you will have more equity from the start. You might opt to pay points to improve your rate over the loan term, meaning you pay more up front. One strategy that is a good option for some is to pay points to bring the rate down over the life of the loan. You will pay more up front, but you will save money in the end.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.