What is a "rate lock period"?

Locking It In

A rate "lock" or "commitment" is a lender's promise to hold a specific interest rate and a specific number of points for you for a certain period of time during your application process. This keeps you from working through your entire application process and discovering at the end that the interest rate has gotten higher.

Although there are various lengths of rate lock periods (from 15 to 60 days), the longer ones are usually more expensive. The lending institution may agree to lock in an interest rate and points for a longer span of time, say sixty days, but in exchange, the rate (and sometimes points) will be higher than with a rate lock of a shorter period.

More Ways to Get a Great Interest Rate

There are other ways to get a good rate, besides going with a shorter rate lock period. A larger down payment will give you a reduced interest rate, because you'll have a good deal of equity at the start. You might choose to pay points to improve your interest rate for the loan term, meaning you pay more initially. To many people, this makes sense and is a good deal..

Foxfield Financial can walk you through the pitfalls of getting a mortgage. Call us at 7205988300.

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