What is a "rate lock period"?

Freezing the Rate

When you're promised a "rate lock" from your lender, it means that you are guaranteed to get a specific interest rate for a determined period while you work on the application process. This prevents you from getting through your whole application process and learning at the end that the interest rate has risen higher.

Rate lock periods can vary in length, between 15 to 60 days, with the longer ones usually costing more. You can get a longer period for your lock, but in making this choice, will most likely have a higher interest rate than you would with a shorter rate lock span of time

Other Interest Saving Strategies

In addition to opting for a shorter rate lock period, there are other ways you can attain the best rate. A bigger down payment will result in a reduced interest rate, because you will have more equity at the start. You may choose to pay points to reduce 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 bring the rate down over the term of the loan. You will pay more initially, but you will come out ahead in the long run.

Custom Lending Group can walk you through the pitfalls of getting a mortgage. Call us at (707) 252-2700.

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