What is a "rate lock period"?
Lock It In
A rate "lock" or "commitment" is a promise from the lender to freeze a particular interest rate and a particular number of points for you for a specified period of time while your application is processed. This keeps you from working through your whole application process and finding out at the end that your interest rate has gotten higher.
While there are several lengths of rate lock periods (from 15 to 60 days), the longer ones are generally more expensive. The lender will agree to hold an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be more than with a rate lock of fewer days.
Other Interest Saving Strategies
There are other ways to get a good rate, besides going with a shorter rate lock period. The larger the down payment, the lower your rate will be, because you will have more equity from the beginning. You could choose to pay points to improve your rate over the loan term, meaning you pay more initially. For a lot of people, this is a good option..
At Trustin Mortgage, LLC, we answer questions about this process every day. Call us: (302) 765-8089.
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