What is a "rate lock period"?
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Freezing the Rate
When you're promised a "rate lock" from a lender, it means that you are guaranteed to keep a certain interest rate over a determined period for your application process. This means your interest rate will not get higher during the application process.
While there might be a choice of rate lock periods (from 15 to 60 days), the extended spans are generally more expensive. The lender will 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 more than with a rate lock of fewer days.
More Ways to Get a Great Interest Rate
In addition to choosing a shorter rate lock period, there are other ways you may be able to score the best rate. The more the down payment, the lower your rate will be, because you will have more equity from the start. You can pay points to lower your rate over the loan term, meaning you pay more up front. For a lot of people, this is a good option.
American Financial Solutions, Inc. can walk you through the pitfalls of getting a mortgage. Call us: 773-755-9200.