What is a "rate lock period"?

What is a Rate Lock?

When you are offered a "rate lock" from a lender, it means that you are guaranteed to keep a specific interest rate over a determined period for the application process. This keeps you from working through your entire application process and discovering at the end that the interest rate has risen higher.

While there may be a choice of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. You can get a longer period for your lock, but in choosing this option, will most likely have a higher interest rate than you would have with a shorter period

Other Interest Saving Strategies

In addition to choosing the shorter lock period, there are several ways you can score the lowest rate. A larger down payment will result in a lower interest rate, because you will have more equity at the start. You might opt to pay points to lower your interest rate over the life of the loan, meaning you pay more up front. One strategy that is a good option for some is to pay points to improve the interest rate over the life of the loan. You will pay more initially, but you will come out ahead, especially if you don't refinance early.

Ruidoso Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 5752581316.

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