What is a "rate lock period"?
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Freezing the Rate
When you're offered a "rate lock" from the lender, it means that you are guaranteed to keep a set interest rate for a determined period for the application process. This prevents you from working through your whole application process and discovering at the end that the interest rate has risen higher.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer spans generally costing more. You can get a longer period for your lock, but in making this choice, will likely have a higher rate than you would have with a shorter span of time
Other Interest Saving Strategies
There are other ways to get a lower rate, in addition to choosing a shorter rate lock period. The larger down payment you make, the smaller your rate will be, because you will be entering the loan with more equity. You might choose to pay points to bring down your interest rate over the loan term, meaning you pay more up front. To a lot of people, this makes sense and is a good deal..
At 1st Security Home Mortgage Corp., we answer questions about this process every day. Call us: (918) 748-4470.