What is a "rate lock period"?
Locking It In
When you are promised a "rate lock" from a lender, it means that you are guaranteed to keep a certain interest rate over a certain number of days while you work on your application process. This saves you from working through your whole application process and discovering at the end that your interest rate has gotten higher.
Although there might be a choice of rate lock periods (from 15 to 60 days), the longer ones are generally more expensive. A lender will agree to hold an interest rate and points for a longer span of time, such as sixty days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.
Other Interest Saving Strategies
In addition to opting for the shorter lock period, there are several ways you are able to get the lowest rate. The bigger the down payment, the better the interest rate will be, as you will be starting with more equity. You might choose to pay points to reduce your interest rate over the loan term, meaning you pay more up front. For many people, this is a good option..
Harbor View Lending* a DBA of Megastar Financial can answer questions about rate lock periods and many others. Call us at (207) 571-8034.